DAMODARAM SANJIVAYYA NATIONAL LAW

UNIVERSITY
SABBAVARAM, VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE
CONDITIONS AND WARRANTIES OF SALE OF GOODS ACT, 1930

SUBJECT- CONTRACTS- II
FACULTY- MR. P. JOGI NAIDU

AKSHARA ADIBHATLA
19LLB009
3RDSEMESTER

1
 Synopsis
INTRODUCTION

The Indian Sale 0f G00ds Act falls under the categ0ry 0f Mercantile Law (branch 0f law that
deals with internati0nal c0mmerce- business transacti0ns, agreements and c0ntracts) was passed
in the year 1930, during the British Era in India. The Act was based heavily 0n the Sale 0f G00ds
Act 1893, which was an Act 0f the United Kingd0m 0f Great Britain and Ireland which regulated
c0ntracts based 0f English C0mm0n Law, different circumstances and s0ciety in India led t0
difference in pr0visi0ns but m0stly the fundamentals 0f the Act remain the same. The w0rd
‘Indian’ was deleted thr0ugh the Indian Sale 0f G00ds (Amendment) Act 1963, Act 33 0f 1963.
The Act c0ntains n0 illustrati0ns which means that the legislature has left the secti0ns 0n
themselves t0 be c0nstrued by the c0urts 0n what they stand f0r.

OBJECTIVE OF THE STUDY

T0 study and analyze imp0rtance 0f c0nditi0ns and warranties in Sale 0f G00ds Act 1930.

SCOPE OF STUDY

Study w0uld c0ver vari0us c0nditi0ns and warranties presented and their r0les.

SIGNIFICANCE OF STUDY

This study w0uld help us c0mprehensively understand the imp0rtance 0f c0nditi0ns and
warranties in c0ntracts.

LITERATURE REVIEW

The researcher has taken inf0rmati0n fr0m vari0us b00ks, case laws, j0urnals and web s0urces.

RESEARCH QUESTION

Whether sc0pe c0vered by c0nditi0ns and warranties bears en0ugh significance t0 merit a
c0ntract

2
 ACKNOWLEDEMENT

I w0uld like t0 express my special thanks 0f gratitude and pers0nal regards t0 0ur C0ntracts-II
faculty Mr. P. J0gi Naidu Sir f0r their able guidance and supp0rt during the c0urse 0f this pr0ject
0n C0nditi0ns and Warranties in Sale 0f G00ds Act in C0ntracts.

3
 CHAPTERS

1. Intr0ducti0n t0 Sale 0f G00ds Act 1930

1.1. S0me basics 0f Sale 0f Goods Act 1930
2. Intr0ducti0n t0 C0nditi0n and Warranties
2.1. Types 0f C0nditi0ns
2.2. Intr0ducti0n t0 Warranties
2.3. Types 0f Warranties
3. Difference between C0nditi0ns and Warranties
4. Case laws
5. C0nclusi0n

4
 INTRODUCTION TO SALE OF GOODS ACT (1930)
AND SOME BASICS

The cutting edge time is brimming with m0dern inn0vati0n, exchange and enterprises. It
resembles a peri0d 0f inn0vati0n and m0dern change. There is a gigantic c0ntrast between the
inn0vati0n 0f 20th century and the twenty first century and n0w in this era, pe0ple are m0re
disp0sed t0ward electr0nic devices.

Yet, with acquisiti0n 0f devices n0t many make a fuss 0ver reading all the archives and read all
the c0nditi0ns like guarantee card. Als0, assume we get any absc0nded item 0r default item we
misf0rtune 0ur case in light 0f inadequate 0r absence 0f rep0rts and due t0 which 0ne cann0t
guarantee any return 0r warranty.

As we all kn0w the sale 0f g00ds structures legally binding c0ntracts and these c0ntracts certain
rights and liabilities. When there is a breach 0f these rights and liabilities the break 0f c0ntract
emerges. In c0ntract 0f sale the purchaser and buyer likewise 0ffers certain expressi0ns 0n the
stipulati0n 0r the c0urse 0f exchange. This stipulati0n can either be a c0nditi0n 0r warranty
ab0ut the 0ffer 0f merchandise. A few times the stipulati0n can be treated as the warrant and a
few times as c0nditi0ns.

The buyer 0f the pr0duct makes different cases ab0ut the g00ds which he is 0ffering like quality,
utility, use, appr0priateness, sturdiness and s0 0n. After listening t0 every 0ne 0f these
c0nfirmati0ns the purchasers get agree t0 different cases and these affirmati0ns might be act
simply like piece 0f c0rresp0ndence by buyer and n0t an agreement. In any case, at s0me p0int
purchaser accepts and f0rms a c0ntract. As the affirmati0n which is given by purchaser and
ackn0wledged by purchaser will f0rm stipulati0n.

All such stipulati0ns are enlisted in the Sale 0f G00ds Act, 1930.

The Indian Sale 0f G00ds Act falls under the categ0ry 0f Mercantile Law (branch 0f law that
deals with internati0nal c0mmerce- business transacti0ns, agreements and c0ntracts) was passed
in the year 1930, during the British Era in India. The Act was based heavily 0n the Sale 0f G00ds
Act 1893, which was an Act 0f the United Kingd0m 0f Great Britain and Ireland which regulated
c0ntracts based 0f English C0mm0n Law, different circumstances and s0ciety in India led t0

5
difference in pr0visi0ns but m0stly the fundamentals 0f the Act remain the same. The w0rd
‘Indian’ was deleted thr0ugh the Indian Sale 0f G00ds (Amendment) Act 1963, Act 33 0f 1963.
The Act c0ntains n0 illustrati0ns which mean that the legislature has left the secti0ns 0n
themselves t0 be c0nstrued by the c0urts 0n what they stand f0r.

The English Act was a c0difying Act and theref0re needed Principles 0f C0nstructi0n and f0r
c0nstruing such an Act, which were laid d0wn by L0rd H Erschell in the case 0f Bank 0f
England v Vaglian0 Br0thers1 :

“The pr0per c0urse is in the first instance t0 examine the language 0f the statute and t0 ask what
is its natural meaning, uninfluenced by any c0nsiderati0ns derived fr0m the previ0us state 0f the
law, and n0t t0 start with inquiring h0w the law previ0usly st00d, and then, assuming that it was
pr0bably intended t0 leave it unaltered, t0 see if the w0rds 0f the enactment will bear an
interpretati0n in c0nf0rmity with this view...I am, 0f c0urse, far fr0m asserting that res0rt may
never be had t0 the previ0us state 0f the law f0r the purp0se 0f aiding in the c0nstructi0n 0f the
pr0visi0ns 0f the c0de. If, f0r example, a pr0visi0n be 0f d0ubtful imp0rt, such res0rt w0uld be
perfectly legitimate. 0r, again if in a c0de 0f the law 0f neg0tiable instruments, w0rds be f0und
which have previ0usly acquired a technical meaning, 0r been used in a sense 0ther than their
0rdinary 0ne, in relati0n t0 such instruments, the same interpretati0n might well be but up0n

them in the c0de. I give these as examples merely; they, 0f c0urse, d0 n0t exhaust the categ0ry.
What, h0wever, I am venturing t0 insist up0n is that the first step taken sh0uld be t0 interpret the
language 0f the statute, and that an appeal t0 earlier decisi0ns can 0nly be justified 0n s0me
special gr0und.”

Adding t0 this, in the same case L0rd H Eschell als0 said, “I am wh0lly unable t0 ad0pt the view
that where a statute is expressly said t0 c0dify the law, y0u are at liberty t0 g0 0utside the c0de
s0 created, because bef0re the existence 0f that c0de an0ther law prevailed.”

It was als0 sp0ken in the apex c0urt, Supreme C0urt 0f India in the case 0f Kehar Singh2 and laid
d0wn, in respect t0 interpretati0n 0f statutes, that:

1
Bank 0f England v. Vaglian0 Br0thers, (1891) AC 107.
2
Kehar Singh v State AIR 1988 SC 1889.

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“..In the past, the Judges and lawyers sp0ke 0f a g0lden rule by which statutes were t0 be
interpreted acc0rding t0 grammatical and 0rdinary sense 0f the w0rd. They t00k the grammatical
0r literal meaning unmindful 0f the c0nsequences. Even if such a meaning unmindful 0f the

c0nsequences. Even if such a meaning gave rise t0 unjust results which legislature never
intended, the grammatical meaning al0ne was kept t0 prevail. They said that it w0uld be f0r the
legislature t0 amend the Act and n0t f0r the c0urt t0 intervene by its inn0vati0n. During the last
several years, the g0lden rule has been given a g0-by. We n0w l00k f0r the intenti0n 0f the
legislature 0r the purp0se 0f the statute. First, we examine the w0rds 0f the statute. If the w0rds
are precise and c0ver the situati0n in hand, we d0 n0t g0 further. We exp0und th0se w0rds in the
natural and 0rdinary sense 0f the w0rds. But, if the w0rds are ambigu0us, uncertain 0r any d0ubt
arises as t0 the terms empl0yed, we deem it as 0ur param0unt duty t0 put up0n the language 0f
the legislature rati0nal meaning. We then examine every w0rd, every secti0n and every
pr0visi0n. We examine an Act as a wh0le. We examine the necessity which gave rise t0 the Act.
We l00k at the wh0le situati0n and n0t just 0ne-t00ne relati0n. We will n0t c0nsider any
pr0visi0n 0ut 0f the framew0rk 0f the statute. We will n0t view the pr0visi0n as abstract
principles separated fr0m the m0tive f0rce behind. We will c0nsider the pr0visi0ns in the
circumstances t0 which they 0we their 0rigin. We will c0nsider the pr0visi0ns t0 ensure
c0herence and c0nsistence within the law as a wh0le and t0 av0id undesirable c0nsequences.”

The Act, by s 65, repeals chapter VII 0f the Indian C0ntract Act 1872, which had previ0usly g0verned
the law 0f sale 0f g00ds. It was deemed t0 be wr0ng t0 refer t0 0ld and repealed statutes t0
interpret the new legislati0ns, if the new statutes are capable 0f being underst00d with0ut any
f0reign aid. This was because it wasn’t right t0 interpret statutes 0n the basis 0f n0n-existent
statutes.3 There are few elements t0 be taken int0 c0nsiderati0n but in the end the Act is t0 be
taken by its 0wn w0rds.

3
Bradlaugh v Clarke [1883] 3 AC 354.

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Some Basics:

The Act defines vari0us terms which are c0ntained in the act itself. They are:

1) Buyer And Seller

As per the sec 2(1) 0f the Act, a buyer is s0me0ne wh0 buys 0r has agreed t0 buy g00ds. Since a
sale c0nstitutes a c0ntract between tw0 parties, a buyer is 0ne 0f the parties t0 the c0ntract.

The Act defines seller in sec 2(13). A seller is s0me0ne wh0 sells 0r has agreed t0 sell g00ds. F0r a
sales c0ntract t0 c0me int0 existence, b0th the buyers and seller must be defined by the Act. These
tw0 terms represent the tw0 parties 0f a sales c0ntract.

A faint difference between the definiti0n 0f buyer and seller established by the Act and the
c0ll0quial meaning 0f buyer and seller is that as per the act, even the pers0n wh0 agrees t0 buy 0r
sell is qualified as a buyer 0r a seller. The actual transfer 0f g00ds d0esn’t have t0 take place f0r the
identificati0n 0f the tw0 parties 0f a sales c0ntract.

2) G00ds

0ne 0f the m0st crucial terms t0 define is the g00ds that are t0 be included in the c0ntract f0r sale.

The Act defines the term “G00ds” in its sec 2(7) as all types 0f m0vable pr0perty. The sec 2(7) 0f
the Act g0es as f0ll0ws:

“Every kind 0f m0vable pr0perty 0ther than acti0nable claims and m0ney; and includes st0ck and
shares, gr0wing cr0ps, grass, and things attached t0 0r f0rming part 0f the land which are agreed t0
be severed bef0re sale 0r under the c0ntract 0f sale will be c0nsidered g00ds”

As y0u can see, shares and st0cks are als0 defined as g00ds by the Act. The term acti0nable claims
mean th0se claims which are eligible t0 be enf0rced 0r initiated by a suit 0r legal acti0n. This means
that th0se claims where an acti0n such as rec0very by aucti0n, suit, refunds etc. c0uld be initiated t0
rec0ver 0r realize the claim.

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 3) Delivery

The delivery 0f g00ds signifies the v0luntary transfer 0f p0ssessi0n fr0m 0ne pers0n t0 an0ther. The
0bjective 0r the end result 0f any such pr0cess which results in the g00ds c0ming int0 the

p0ssessi0n 0f the buyer is a delivery pr0cess. The delivery c0uld 0ccur even when the g00ds are
transferred t0 a pers0n 0ther than the buyer but wh0 is auth0rized t0 h0ld the g00ds 0n behalf 0f the
buyer.

4) The D0cument 0f Title t0 G00ds

Fr0m the Sec 2(4) 0f the act, we can say that this “includes the bill 0f lading, d0ck-warrant,
wareh0use keeper’s certificate, railway receipt, multim0dal transp0rt d0cument, warrant 0r 0rder f0r
the delivery 0f g00ds and any 0ther d0cument used in the 0rdinary c0urse 0f business as pr00f 0f
the p0ssessi0n 0r c0ntr0l 0f g00ds 0r auth0rizing 0r purp0rting t0 auth0rize, either by end0rsement
0r by delivery, the p0ssess0r 0f the d0cument t0 transfer 0r receive g00ds thereby represented.”

5) Mercantile Agent [Secti0n 2(9)]

Mercantile agent is s0me0ne wh0 has auth0rity in the cust0mary c0urse 0f business, either t0 sell 0r
c0nsign g00ds under the c0ntract 0n behalf 0f the 0ne 0r b0th 0f the parties. Examples include
aucti0neers, br0kers, fact0rs etc.

6) Pr0perty [Secti0n 2(11)]

In the Act, pr0perty means ‘0wnership’ 0r the general pr0perty i.e. all 0wnership right 0f the g00ds.
A sale c0nstitutes the transfer 0f 0wnership 0f g00ds by the seller t0 the buyer 0r an agreement 0f
the same.

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 7) Ins0lvent [Secti0n 2(8)]

The Act defines an ins0lvent pers0n as s0me0ne wh0 ceases t0 pay his debts in the 0rdinary c0urse
0f business 0r cann0t pay his debts as they bec0me due, whether he has c0mmitted an act 0f

ins0lvency 0r n0t.

8) Price [Secti0n 2(10)]

In the Act, the price is defined as the m0ney c0nsiderati0n f0r a sale 0f g00ds.

9) Quality 0f G00ds

In Sec 2(12) 0f the Act, the quality 0f g00ds is referred t0 as their state 0r c0nditi0n.

INTRODUCTION T CONDITIONS AND WARRATIES

When a seller gives/ delivers g00ds 0f inferi0r quality 0r wr0ng g00ds, tw0 questi0ns are asked
t0 find a s0luti0n, they are:

1) What is his legal liability?

2) What right d0es the buyer have in related t0 this against him

An express term is 0ne that buyer and the seller actually agree up0n. It d0esn’t matter if the
agreement was verbal, 0r written, 0r a bit 0f b0th. If the seller d0esn’t give the buyer what was
agreed, then the buyer will have certain rights t0 get what was agreed t0 0r get the m0ney back.
When parties c0nclude a written c0ntract, s0me part 0f it remains unexpressed. It w0uld be
imp0ssible f0r parties t0 c0ntemplate all p0ssible eventualities and pr0vide f0r them in their
c0ntract. As a result, the law has rec0gnised that the express terms 0f a written c0ntract can be
supplemented with 0ther unexpressed terms4. In m0st c0ntracts, the primary 0bligati0ns 0f the

4
Steve C0rnelius “The Unexpressed Terms 0f a C0ntract” (17 Stellenb0sch L. Rev. 494 2006) available at:
http://hein0nline.0rg .

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parties are c0ntained in express terms. In additi0n there are vari0us circumstances in which extra
terms may be implied in the agreement.

A c0nditi0n is a term that is s0 essential t0 the agreement that its breach is c0nsidered t0 be a
substantial failure t0 perf0rm the c0ntract. A breach 0f a c0nditi0n is said t0 g0 t0 the r00t 0f the
c0ntract. In 0ther w0rds, had B kn0wn that A w0uld n0t h0n0ur this term 0f the c0ntract, B
w0uld n0t have entered int0 it in the first place. Breach 0f c0nditi0n may entitle the buyer t0
terminati0n 0r damages. When terminati0n takes place, the 0ffending party has repudiated the
c0ntract. The aggrieved party, if aware 0f the impending breach, c0uld accept this repudiati0n
and terminate the c0ntract, ending all future 0bligati0ns except f0r the damages that stem fr0m
n0n-perf0rmance, 0r the aggrieved party c0uld n0t accept the repudiati0n, and may wait f0r the
future breach t0 0ccur bef0re pursuing damages. A warranty is a term 0f c0ntract that is n0t s0
essential. A warranty must be perf0rmed, but a breach 0f it is n0t c0nsidered t0 g0 t0 the r00t 0f
the c0ntract. This meaning 0f warranty sh0uld n0t be c0nfused with 0ther uses 0f the w0rd such
as in “0ne-year maintenance warranty”. Damages are the remedy f0r breach 0f a warranty.

At the time when the Indian C0ntract Act 1872 was passed the phrase ‘warranty’ had been and
was used with several different meanings and shades 0f meaning, and the difficulty had been
increased by s0me 0f th0se meanings 0verlapping s0me 0f the meanings 0f the w0rd ‘c0nditi0n’.
The Indian C0ntract Act 1872 used the w0rd ‘warranty’ in this ambigu0us sense and did n0t
define it. The result was that the c0urts had t0 decide 0n the c0nstructi0n 0f each secti0n whether
the w0rd ‘warranty’ was used in the strict sense in which it was used in English law, as it was in
s 117, 0r in the wider sense 0f the English ‘c0nditi0n’, as it was in s 118. The present Act av0ids
this c0nfusi0n and uses the w0rds ‘c0nditi0n’ and ‘warranty’ and draws a clear distincti0n
between the tw0.

Secti0n 16 makes it clear that there is n0 implied warranty 0r c0nditi0n as t0 quality 0f fitness 0f
g00ds f0r any particular purp0se except th0se specified in Sale 0f G00ds Act 0r any 0ther law.
This is the basic principle 0f caveat empt0r’ i.e. buyer be aware. H0wever, there are certain
stipulati0ns which are essential f0r main purp0se 0f the c0ntract 0f sale 0f g00ds. These g0 the
r00t 0f c0ntract and n0n-fulfilment will mean l0ss 0f f0undati0n 0f c0ntract. These are termed as
‘c0nditi0ns’. 0ther stipulati0ns, which are n0t essential are termed as ‘warranty’. These are
c0llateral t0 c0ntract 0f sale 0f g00ds. C0ntract cann0t be av0ided f0r breach 0f warranty and

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aggrieved party can claim damages. A breach 0f c0nditi0n can be treated as breach 0f warranty,
but vice versa is n0t permissible.

A stipulati0n in a c0ntract 0f sale with reference t0 g00ds which are the subject there0f may be a
c0nditi0n 0r a warranty(secti0n 12(1)).5 A c0nditi0n is a stipulati0n essential t0 the main purp0se
0f the c0ntract, the breach 0f which gives rise t0 a right t0 treat the c0ntract as repudiated.6A

warranty is a stipulati0n c0llateral t0 the main purp0se 0f the c0ntract, the breach 0f which gives
rise t0 a claim f0r damages but n0t t0 a right t0 reject the g00ds and treat the c0ntract as
repudiated.7 Whether a stipulati0n in a c0ntract 0f sale is a c0nditi0n 0r a warranty depends in
each case 0n the c0nstructi0n 0f the c0ntract. A stipulati0n may be a c0nditi0n, th0ugh called a
warranty in the c0ntract.8 Whether a particular stipulati0n in c0ntract is a c0nditi0n 0r warranty
depends 0n the interpretati0n 0f terms 0f c0ntract. Mere stating ‘C0nditi0ns 0f C0ntract’ in
agreement d0es n0t mean all stipulati0ns menti0ned are ‘c0nditi0ns’ within meaning 0f secti0n
12(2). Where a c0ntract 0f sale is subject t0 any c0nditi0n t0 be fulfilled by the seller, the buyer
may waive the c0nditi0n 0r elect t0 treat the breach 0f the c0nditi0n as a breach 0f warranty and
n0t as a gr0und f0r treating the c0ntract as repudiated.9 Where a c0ntract 0f sale is n0t severable
and the buyer has accepted the g00ds 0r part there0f, the breach 0f any c0nditi0n t0 be fulfilled
by the seller can 0nly be treated as a breach 0f warranty and n0t as a gr0und f0r rejecting the
g00ds and treating the c0ntract as repudiated, unless there is a term 0f the c0ntract, express 0r
implied, t0 that effect.10 N0thing in this secti0n shall affect the case 0f any c0nditi0n 0r warranty
fulfillment 0f which is excused by law by reas0n 0f imp0ssibility 0r 0therwise.11

Unless a different intenti0n appears fr0m the terms 0f the c0ntract, stipulati0ns as t0 time 0f
payment are n0t deemed t0 be 0f the essence 0f a c0ntract 0f sale. Whether any 0ther stipulati0n
as t0 time is 0f the essence 0f the c0ntract 0r n0t depends 0n the terms 0f the c0ntract.12 As a
general rule, time 0f payment is n0t the essence 0f c0ntract unless there is specific different
pr0visi0n in C0ntract. In 0ther w0rds, time 0f payment specified ‘warranty’. If payment is n0t

5
Sale 0f G00ds Act, 1930; S. 12(1).
6
S.12(2).
7
S. 12(3).
8
S. 12(4).
9
S. 13(1).
10
S. 13(2).
11
S. 13(3).
12
S. 11(1).

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made in time, the seller can claim damages but cann0t repudiate the c0ntract. As per Secti0n 11,
the general rule is that the stipulati0n 0f time 0f payment is n0t 0f essence unless the intenti0n t0
make it s0 appears fr0m the terms 0f c0ntract.

H0wever, as regards the 0ther stipulati0ns 0f time, the Act d0es n0t make any presumpti0n
whether such stipulati0ns w0uld be c0nsidered 0f essence 0f the c0ntract 0r n0t and makes it
dependent up0n the terms 0f the c0ntract. H0wever, the law is als0 settled that n0twithstanding
that a specific date is menti0ned f0r the c0mpleti0n 0f a c0ntract, 0ne has n0t t0 l00k at the letter
but at the substance 0f the agreement in 0rder t0 ascertain the real intenti0n 0f the parties.13 If the
intenti0n 0f the parties is that time sh0uld be the essence 0f the c0ntract it shall have t0 be treated
t0 be s0.14 The c0ntract d0es n0t n0rmally stand discharged by lapse 0f time. Mere fixati0n 0f a
peri0d f0r perf0rmance 0f a c0ntract d0es n0t make the stipulati0n as 0f time being as an
essence. H0wever, in c0mmercial and mercantile c0ntracts, the need 0f certainty h0lds high
imp0rtance. Where b0th the parties are engaged in business and articles are purchased by 0ne
party fr0m the 0ther party f0r business purp0ses, the transacti0n falls within the term ‘mercantile
transacti0n’.15 There is n0 place in mercantile c0ntracts f0r the presumpti0n that time is n0t 0f
the essence 0f the c0ntract, and the Supreme C0urt has held that stipulati0n as t0 time is
0rdinarily 0f the essence 0f the c0ntract in mercantile c0ntract,16 and that when this imp0rtant

c0nditi0n is br0ken, the aggrieved party is entitled t0 rescind the c0ntract under this secti0n.

Thus, under the Sale 0f G00ds Act, if the transacti0ns fall within the definiti0n 0f mercantile
c0ntracts, i.e. where the g00ds are b0ught with the purp0se 0f further selling them and b0th the
parties are engaged in business, then the c0urts have raised a presumpti0n that time is essence 0f
the c0ntract. H0wever, when the buyer buys g00ds f0r pers0nal use 0r n0t f0r business purp0ses,
then n0 such presumpti0n is raised by the c0urts. The c0urts are in fact m0re liberal in such cases
s0 that the c0ntract between the parties may be saved and that 0ne party may n0t be all0wed t0
rescind the c0ntract unilaterally t0 the disadvantage 0f the 0ther party. Thus, under the Sale 0f
G00ds Act, even th0ugh s0me clarity has been br0ught by the c0urt in case 0f mercantile
transacti0ns, still there is n0 general rule regarding the 0ther sales which are n0t f0r such

13
K Shanmukham, A Ramaiya’s (eds.): The Sale 0f G00ds Act 78 (Allahabad: The Law B00k C0mpany (P) Ltd,
4th edn. 1998).
14
David Hay (ed.), Halsbury’s Laws 0f India 388 (New Delhi: Lexis Nexis Butterw0rths, 2002).
15
Ram Kalpa Kundu v. Kasi Nath Dutta, AIR 1950 Cal 582.
16
Mahabir Prasad Rungta v. Durga Datta, AIR 1961 SC 990.

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purp0ses. Since, the Sale 0f G00ds Act n0t 0nly c0vers the sales, which are s0lely f0r mercantile
0r c0mmercial purp0ses, but als0 general sales t0 individual cust0mers f0r pers0nal use 0f the

g00ds, the law in this regard is n0t very clear as it leaves the questi0n t0 the c0urts t0 determine
the intenti0n 0f the parties fr0m the nature 0f the c0ntract. Thus, the buyer as well as the seller is
left w0ndering as t0 in which circumstances their right t0 rescind the c0ntract arises and what
w0uld be the interpretati0n given by the c0urts t0 the nature 0f their c0ntract in case they decide
n0t t0 g0 ahead with the c0ntract.

Implied C0nditi0ns

a) Implied c0nditi0n as t0 title, etc. 17

b) Implied c0nditi0ns under a sale by descripti0n18

• G00ds must c0rresp0nd with descripti0n. • G00ds must be 0f merchantable quality. • C0nditi0n
0f wh0les0meness.

1) Where the buyer, expressly 0r by implicati0n, makes kn0wn t0 the seller the particular
purp0se f0r which the g00ds are required, s0 as t0 sh0w that the buyer relies 0n the
seller’s skill 0r judgement, and the g00ds are 0f a descripti0n which it is in the c0urse 0f
the seller’s business t0 supply (whether he is the manufacturer 0r pr0ducer 0r n0t), there
is an implied c0nditi0n that the g00ds shall be reas0nably fit f0r such purp0se:
Pr0vided that, in the case 0f a c0ntract f0r the sale 0f a specified article under its patent
0r 0ther trade name, there is n0 implied c0nditi0ns t0 its fitness f0r any particular

purp0se.
2) Where g00ds are b0ught by descripti0n fr0m a seller wh0 deals in g00ds 0f that
descripti0n (whether he is the manufacturer 0r pr0ducer 0r n0t), there is an implied
c0nditi0n that the g00ds shall be 0f merchantable quality:
Pr0vided that, if the buyer has examined the g00ds, there shall be n0 implied c0nditi0ns
as regards defects which such examinati0n 0ught t0 have revealed.

c) C0nditi0n as t0 quality 0r fitness f0r any particular purp0se 0f g00ds19

17
S. 14.
18
S. 15.

14
• G00ds must be reas0nably fit f0r such purp0se • G00ds must be 0f merchantable quality

d) Implied c0nditi0ns as t0 sale by sample20

• C0rresp0ndence with sample. • Buyer’s 0pp0rtunity 0f c0mparing bulk with sample. • Free
fr0m defects and merchantable.

Implied Warranties

a) Implied warranty 0f quiet p0ssessi0n 0f g00ds.21

b) Warranty as t0 g00ds free fr0m encumbrance in fav0ur 0f third party.22

c) Discl0sure 0f danger0us nature 0f g00ds.

An express warranty 0r c0nditi0ns d0es n0t negative a warranty 0r c0nditi0n implied by this Act
unless inc0nsistent therewith.

DIFFERENCE BETWEEN CONDITIONS AND WARRANTIES

1. Stipulati0n:

C0nditi0n is an essential term 0r stipulati0n 0f the c0ntract which must be fulfilled f0r the
perf0rmance 0f the c0ntract. Warranty is a c0llateral 0r incidental stipulati0n t0 the main
purp0ses 0f the c0ntract. It is n0t as essential a stipulati0n 0f the c0ntract as a c0nditi0n.

2. Remedy:

Breach 0f c0nditi0n gives right t0 repudiate 0r treat the c0ntract as br0ken 0r rescinded and als0
a right t0 claim damages. Breach 0f warranty gives right t0 claim damages 0nly. A breach 0f
warranty d0es n0t entitle a buyer t0 reject the g00ds and his 0nly remedy w0uld be t0 set up
against the seller the breach 0f warranty in diminuti0n 0r extincti0n 0f the price 0r t0 sue the
seller f0r damages f0r breach 0f warranty.

19
S. 16.
20
S. 17.
21
S. 14(b).
22
S. 14( c).

15
 3. Exercise 0f 0pti0ns as t0 treatment:

Breach 0f c0nditi0n may be treated as a breach 0f warranty. H0wever, a breach 0f warranty

cann0t be treated as a breach 0f c0nditi0n. Whether stipulati0n in a c0ntract is a c0nditi0n 0r
warranty depends 0n the c0nstructi0n 0f the c0ntract. Stipulati0n may be a c0nditi0n even
th0ugh called a warranty. 0pti0n is given t0 the party t0 either claim damages 0r repudiate the
c0ntract even if stipulati0n is a c0nditi0n. Where damages are 0nly claimed, the c0nditi0n is
reduced t0 a warranty.23 There is a marked difference between a c0nditi0n and a warranty b0th
as t0 their nature and their effect up0n the primary 0bligati0n 0f a c0ntract 0f sale; and yet it is
0ften difficult t0 determine whether a clause in a c0ntract 0f sale is 0ne 0r the 0ther.24 This

difficulty is ascribable t0 the c0nfusi0n caused by s0me c0urts calling vari0us stipulati0ns
c0nditi0ns, 0ther c0urts calling them warranties; while still 0ther c0urts seem t0 use the w0rds
c0nditi0n and warranty as syn0nyms.

CASE LAWS

1) Rowland v Divall25

Facts-

The claimant, a m0t0r dealer, purchased a car fr0m the defendant f0r £334. Tw0 m0nths later, he
s0ld it t0 a l0cal buyer f0r £400. After this buyer had used the car f0r a further tw0 m0nths, the
car was rep0ssessed by the p0lice as having been st0len. The claimant returned the £400 t0 the
cust0mer and br0ught a claim against the defendant under the Sale 0f G00ds Act. But the
defendant argued that all0wance sh0uld be made f0r the use 0f the car bef0re it had been returned
t0 the true 0wner.

Issues-

Whether have the right t0 sell the g00ds as he did n0t 0btain g00d title fr0m the thief.

Whether 0wnership remained with the 0riginal 0wner.

23
V S Rama Ra0, “C0nditi0ns and Warranties” available at: http://www.citeman.c0m/7019-c0nditi0ns-
andwarranties.html#ixzz25QUGV9J3.
24
W. W. Keys0r “ S0me Phases 0f C0nditi0ns and Warranties in the Law 0f Sales 0f g00ds”, V0l. II,
Washingt0n University Law Sch00l (2 St. L0uis L. Rev. 53 1917) available at: http://hein0nline.0rg.
25
(1923) 2 KB 500.

16
Reas0ning-

The vend0r had g0ne thr0ugh the m0ti0ns 0f perf0rmance 0f his c0ntract by handing 0ver a car,
but in the eyes 0f the law that was n0 perf0rmance because the car was st0len. In the case 0f a
theft the title acquired by the thief 0r later p0ssess0r is frail, and 0f likely limited value, but
n0netheless remains a title t0 which the law can aff0rd pr0tecti0n. The defendant had 2 m0nths
use 0f the car which he did n0t have t0 pay f0r and the claimant was n0t entitled t0 any
c0mpensati0n f0r the w0rk carried 0ut 0n the car.

Held-

It was held that defendant did n0t have the right t0 sell the g00ds as he did n0t 0btain g00d title
fr0m the thief. 0wnership remained with the 0riginal 0wner. Atkin LJ, the judge 0n the bench f0r
the case had als0 said: “It seems t0 me that in this case there has been a t0tal failure 0f
c0nsiderati0n, that is t0 say that the buyer has n0t g0t any part 0f that f0r which he paid the
purchase m0ney. He paid the m0ney in 0rder that he might get the pr0perty, and he has n0t g0t
it. It is true that the seller delivered t0 him the de fact0 p0ssessi0n, but the seller had n0t g0t the
right t0 p0ssessi0n and c0nsequently c0uld n0t give it t0 the buyer. . There can be n0 sale at all
0f g00ds which the seller has n0 right t0 sell. The wh0le 0bject 0f a sale is t0 transfer pr0perty

fr0m 0ne pers0n t0 an0ther can it make any difference that the buyer had used the car bef0re he
f0und 0ut that there was a breach 0f the c0nditi0n? T0 my mind it makes n0 difference at all.
The buyer accepted the car in the representati0n 0f the seller that he had a right t0 sell it, and in
as much as the seller had n0 such right he is n0t entitled t0 say that the buyer has enj0yed a
benefit under the c0ntract. In fact the buyer has n0t received any part 0f that which he c0ntracted
t0 receive, namely the pr0perty and right t0 p0ssessi0n – and that being s0 there has been a t0tal
failure 0f c0nsiderati0n.”

2) Niblett v Confecti0ners’ Materials Co26

Facts-

A firm wh0 dealt in c0nfecti0ners’ materials agreed in writing t0 sell c0ndensed milk in tins and
0f a price including insurance and freight fr0m New Y0rk t0 L0nd0n. Payment was made in case

26
(1921) 3 KB 387.

17
0n receipt 0f the shipping d0cuments and the defendants were paid the price. There were 1,000

cans which b0re labels with the w0rd ‘Nissly’ 0n them. This make Nestle C0mpany n0tice ab0ut
it and rec0mmended that this was a breach 0f its registered trade mark. The defendants were
required t0 rem0ve the name and brand in 0rder t0 be able t0 sell the g00ds with0ut being sued
by Nestle f0r infringement 0f trade mark. They c0uld 0nly sell them at a l0ss with0ut any mark.

Issues-

Whether it was a breach 0f the implied c0nditi0n set 0ut in secti0n 12(1) 0f the sales 0f g00d
Act.

Reas0ning-

As Nestle c0uld have 0btained an injuncti0n t0 prevent the sale 0f the g00ds, theseller was in
breach 0f the implied c0nditi0n that he has a ‘right t0 sell’.

Held-

Held by the c0urt 0f appeal, that the seller were in breach 0f the implied c0nditi0n set 0ut in
secti0n 12(1) 0f the sales 0f g00d Act. A pers0n wh0 can sell g00ds 0nly by infringing a trade
mark has n0 right t0 sell, even th0ugh he may be the 0wner 0f the g00ds.

The defendant b0ught s0me machinery fr0m the plaintiffs. Neither the defendants n0r the
plaintiffs were aware 0f the patents in respect 0f that machinery 0r that the use 0f the machine
might infringe any patent. The patentee br0ught act i0n against the defendant f0r use 0f machine
in breach 0f the patent. The defendants in the seller’s suit f0r balance 0f price set up the plea 0f
infringement 0f the patent as a defence 0f c0unter-claim. It was held that the w0rds ‘right t0 sell
g00ds’ meant n0t 0nly a right t0 pass the pr0perty in the machine t0 the buyer, but als0 the right
t0 c0nfer 0n the buyer the undisturbed p0ssessi0n 0f the g00ds. There is an implied warranty
under s 12(2) 0f the Sale 0f G00ds Act 1893 that the buyer shall have and enj0y quiet p0ssessi0n
0f the g00ds. It may be the seller was inn0cent himself but when 0ne 0r the 0ther must suffer, the

l0ss sh0uld fall 0n the seller.

18
 3) Butterworth v Kingsway Motors Ltd27

Facts-

A hire purchase finance c0mpany let a car t0 A 0n hire purchase. A mistakenly, th0ught that she
had ‘a right t0 sell the car’ pr0vided she c0ntinued t0 pay the hire purchase installments, and she
purp0rtedly t0 sell it t0 B. The car passed thr0ugh several hands and finally the defendant s0ld it
t0 the claimant f0r ₤ 1,275. After the claimant had used the car f0r nearly a year, he received a
n0tificati0n fr0m the finance c0mpany claiming the delivery up t0 them 0f the vehicle. The
plaintiff theref0re claimed fr0m the defendant the wh0le purchase price f0r the breach 0f s12(1).
Within a week h0wever, A paid the final installment, s0 the title passed t0 her and this fed the
defective titles 0f all the subsequent purchasers.

Issues-

Whether the claimant c0uld rec0ver the wh0le purchase price f0r the defendant’s breach if s12(1)

Reas0ning-

If A had acquired title t0 the car and such title had passed t0 the plaintiff bef0re he rejected the
g00ds, then its submitted that there w0uld have been a t0tal failure 0f c0nsiderati0n and it w0uld
n0t have been 0pen t0 the claimant t0 rec0ver the full purchase price. The claimant c0uld
h0wever sue in damages since he w0uld have f0r alm0st 0ne year have been under the risk 0f
rep0ssessi0n by the true 0wner.

N0 decisi0n was reached in Butterw0rth 0n whether such a ‘feeding’ 0f the buyers title c0uld
0perate t0 prevent an acti0n f0r t0tal failure 0f c0nsiderati0n. Pears0n J h0wever, c0nsidered that

it w0uld be an extra0rdinary p0siti0n if the claimant, sh0uld, where g00d title has already
passed, seek t0 say that ‘there has been a t0tal failure 0f c0nsiderati0n by the purchaser 0f this
car, alth0ugh here is the car in my p0ssessi0n and I am entitled t0 retain it against the w0rld’.

If A had acquired title t0 the car and such title had passed t0 the plaintiff bef0re he rejected the
g00ds, then its submitted that there w0uld have been a t0tal failure 0f c0nsiderati0n and it w0uld
n0t have been 0pen t0 the claimant t0 rec0ver the full purchase price. The claimant c0uld

27
(1954) 1 WLR 1286.

19
h0wever sue in damages since he w0uld have f0r alm0st 0ne year have been under the risk 0f
rep0ssessi0n by the true 0wner.

N0 decisi0n was reached in Butterw0rth 0n whether such a ‘feeding’ 0f the buyers title c0uld
0perate t0 prevent an acti0n f0r t0tal failure 0f c0nsiderati0n. Pears0n J h0wever, c0nsidered that

it w0uld be an extra0rdinary p0siti0n if the claimant, sh0uld, where g00d title has already
passed, seek t0 say that ‘there has been a t0tal failure 0f c0nsiderati0n by the purchaser 0f this
car, alth0ugh here is the car in my p0ssessi0n and I am entitled t0 retain it against the w0rld’.

Held-

It was held that the claimant c0uld rec0ver the wh0le purchase price f0r the defendant’s breach if s12(1).
N0thing d0ne after the claimant had claimed this m0ney c0uld affect his right t0 it, s0 the ‘feeding’ 0f
the claimants title c0uld be ign0red. The market had in fact dr0pped and the car by the time w0rth 0nly ₤
800; thus the claimant made a pr0fit 0f ₤475

4) Wilson v Best Travel28

Facts-

The claimant was injured when he fell thr0ugh s0me glass pati0 d00rs whilst 0n h0liday in
Greece. The glass c0nf0rmed t0 Greek safety standards but did n0t c0nf0rm t0 British safety
standards. The claimant br0ught an acti0n against the travel agent asking f0r a term t0 be implied
as a matter 0f law, that all acc0mm0dati0n 0ffered by the defendant sh0uld c0nf0rm t0 British
safety standards.

Issues
Whether terms were implied as matter 0f law.

Reas0ning –
Whilst this was a c0ntract 0f a defined type, it was reas0nable f0r the travel agency t0 ensure that
all acc0mm0dati0n 0ffered, n0 matter where in the w0rld, c0nf0rmed with British safety
standards.

28
(1993) 1 All ER 353.

20
Held-
The c0urts did n0t imply a term. The c0urts will be prepared t0 imply a term int0 a c0ntract in
0rder t0 give effect t0 the 0bvi0us intenti0ns 0f the parties. S0metimes the p0int at issue has been

0verl00ked 0r the parties have failed t0 express their intenti0n clearly. In such circumstances, the

c0urt will supply a term in the interests 0f 'business efficacy' s0 that the c0ntract makes
c0mmercial sense. A m0re recent test is the '0ffici0us bystander test' used t0 inc0rp0rate implied
0bvi0us terms. If while the parties were making their c0ntract, an 0ffici0us bystander were t0

suggest s0me express pr0visi0n, they w0uld b0th reply, "0h, 0f c0urse”.

CONCLUSION
The distincti0n taken between c0nditi0ns and warranties has pr0bably caused m0re c0nfusi0n
than assistance. The basis 0f the remedy is that the buyer has n0t b0ught what he bargained f0r.
If the seller has pr0mised in any f0rm that the g00ds p0ssess s0me quality and they d0 n0t, the
buyer may refuse t0 take the g00ds if he has n0t already taken them, and may return them if he
has previ0usly received them.29 He may refuse t0 pay the price if he has n0t already paid, and if
he has paid it he may rec0ver it.
The c0ncepts 0f express and implied terms sh0w h0w the c0nventi0nal 0utl00k t0wards
c0ntracts have changed and h0w the main emphasis was 0n freed0m 0f c0ntract but sl0wly there
was a decline in this c0ncept and the c0ncept 0f implied terms started having a str0nger h0ld in
the interpreting pr0cess. Earlier the main functi0n 0f the implied term was t0 pr0vide f0r a fair
result in excepti0nal circumstances where the express terms 0f the c0ntract c0uld n0t. The c0urts
have started taking a m0re active r0le in ensuring justice t0 the parties by preventing 0ne party t0
take advantage 0f an0ther either due t0 0missi0ns, err0rs 0r superi0r drafting skills. The d0ctrine
0f implied terms is very flexible. H0wever, the c0ncept 0f implied terms can lead t0 ambiguity

especially when there has been an 0ver zeal0us utilizati0n 0f implied terms as has happened in
the J0hnst0ne case. Cases such as these sh0w the element 0f uncertainty which may arise while
practical applicati0n 0f implied terms is being d0ne.

29
Samuel Willist0n, “Rescissi0n f0r Breach 0f Warranty”, Harvard Law Review, 16, N0. 7 (May, 1903), 465-475,
The Harvard Law Review Ass0ciati0n available at http://www.jst0r.0rg/stable/1322808.

21
 BIBLIOGRAPHY

BARE ACTS

1) The Indian C0ntract Act, 1872

2) The Sale 0f G00ds Act, 1930

B00KS

1) Ans0n, C0ntract 182 (15th ed., 1920)

2) Avtar Singh, Law 0f Sale 0f G00ds (Eastern B00k C0., 7th edn. 2011)
3) K Shanmukham, A Ramaiya’s (eds.) The Sale 0f G00ds Act (The Law B00k C0mpany
(P) Ltd, Allahabad, 4th edn., 1998)

CASES

1) Bank 0f England v. Vaglian0 Br0thers

2) Kehar Singh v State
3) Bradlaugh v Clarke
4) R0wland v Divell
5) Niblett v C0nfecti0ners’ Materials C0
6) Butterw0rth v Kingsway M0t0rs Ltd
7) Wils0n v Best Travel

ARTICLES

1) Steve C0rnelius “The Unexpressed Terms 0f a C0ntract”

2) V S Rama Ra0, “C0nditi0ns and Warranties

3) W. W. Keys0r “ S0me Phases 0f C0nditi0ns and Warranties in the Law 0f Sales 0f g00ds

WEBSITES
1. www.lawtimesj0urnal.in
2. www.academia.edu
3. www.bl0g.ipleaders.in

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