Conditions and Warranties

 A contract of Sale of goods contains various terms

or stipulations regarding the quality of the goods,
the mode of its payment, the delivery of goods
and its time and place.
 Some of these stipulations may be major terms
which go to the very root of the contract and their
breach may frustrate the very purpose of the
contract,
 While others may be minor terms which are not so
vital that their breach may seem to be breach of the
contract as such.
 In law of sales major terms are called ‘conditions’
and minor terms are called ‘warranties’.
Condition and Warranty Distinguished
1. As to value: A condition is a stipulation which is
essential to the main purpose of the contract,
whereas a warranty is a stipulation which is
collateral to the main purpose of the contract.
2. As to breach: The breach of a condition gives the
aggrieved party the right to repudiate the contract
and also to claim damages, whereas the breach of
warranty gives the aggrieved party a right to claim
damages only.
3. As to treatment: A breach of condition may be
treated as a breach of warranty. But a breach of
warranty cannot be treated as a breach of condition.
When breach of Condition is to be Treated as Breach
of Warranty
1. Voluntary waiver by buyer. Although on a breach
of condition by the seller, the buyer has a right to
treat the contract as repudiated and reject the
goods, but he is not bound to do so.
2. Acceptance of goods by buyer. Where the buyer
has accepted the goods and subsequently he comes
to know of the breach of condition, he cannot reject
them, but can only maintain an action for
damages.
Express and Implied Conditions and Warranties
1. Conditions are express when at the will of the
parties they are inserted in the contract, and
they are said to be implied when the law presumes
their existence in the contract automatically
though they have not been put into it in express
words.
2. Implied conditions may be negatived or varied by
express agreement, or by course of dealing between
the parties, or by usage of trade.
Implied Conditions
1. Condition as to title.
 The seller has the right to sell the goods if either he
is the owner of the goods or he is owner’s agent.
 If the seller’s title turns out to be defective the
buyer is entitled to reject the goods and to recover
his price.
 The implied condition as to title makes it obligatory
upon the seller that he must not only be the owner
but also must be able to uphold the validity of
the contract.
 If the goods sold bear labels infringing the
trade mark of another, the seller is guilty of
breach of this condition although he had full
ownership of the goods.

2. Condition in a sale by description.

 “Where there is a contract of sale of goods by
description, there is an implied condition
that the goods shall correspond with the
description.”
 If the buyer has examined the goods will
not affect his right to reject the goods, if
the deviation of the goods from the
description is such which could not have
been discovered by casual examination,
i.e., if the goods show any latent defects.
 The description may be in terms of the qualities
or characteristics of the goods, e.g., long staple
cotton, sugar C-30, basmati rice etc.
3. Condition in a sale by sample. When sale,
goods are to be supplied according to a sample
agreed upon, the implied conditions are:
(i) That the bulk shall correspond with the sample in
quality;
(ii) That the buyer shall have a reasonable
opportunity of comparing the bulk with the
sample;
(iii) That there should not be any latent defect in the
goods. If the defect is patent one, that is, easily
discoverable by the exercise of ordinary care,
and the buyer takes delivery after inspection,
there is no breach of implied condition and the
buyer has no remedy.
4. Condition in a sale by sample as well as by
description.
 When goods are sold by sample as well as by
description, there is an implied condition that the
bulk of the goods shall correspond both with the
sample and with the description.
5. Condition as to fitness or quality. In a contract of
sale an implied condition is deemed to exist on the
part of the seller that the goods supplied shall be
reasonably fit for the purpose for which the
buyer wants them, if the following conditions are
satisfied:
(i) The buyer, expressly or impliedly, should make
known to the seller the particular purpose for
which the goods are required; and
(ii) The buyer should rely on the seller’s skill or
judgment; and
(iii) The goods sold must be of a description which the
seller deals in the ordinary course of his
business, whether he be the manufacturer or not.
 It is important that the implied condition as to
fitness applies only in the case of sale of goods to a
normal buyer. If the buyer is suffering from an
abnormality; and it is not made known to the
seller at the time of sale, this condition does not
apply.
Sale under patent or trade name.
 In the case of a contract for the sale of specified
article under its patent or other trade name, there
is no implied condition as to its fitness for any
particular purpose.
 The condition as to fitness will apply if the
buyer relies on the seller’s skill and
judgment as regards the suitability of the
goods .
6. Condition as to Merchantability.
 This condition is implied only where the sale
is by description.
 The goods should be of ‘merchantable
quality.’
 For making this condition applicable, the
following conditions must also be satisfied:
(i) The seller should be a dealer in goods of
that description, whether he be the
manufacturer or not; and
(ii) The buyer must not have any opportunity of
examining the goods or there must be some
latent defect in the goods which would not be
apparent on reasonable examination of the same.
(iii) The phrase ‘merchantable quality’ means that the
goods are of such quality and in such condition
that a reasonable man, acting reasonably, would
accept them, whether he buys them for his own
use or to sell again.
7. Condition as to wholesomeness.
 This condition is implied only in a contract of sale
of eatables and provisions.
 In such cases the goods supplied must not only
answer to description and be merchantable but
must also be wholesome, i.e., free from any defect
which render them unfit for human
consumption.
E.g. “F” bought milk from “A”, a dairy owner. The milk
was contaminated with germs of typhoid fever. F’s
wife, on taking the milk, became infected and died
of it. A, was held liable in damages.
Implied Warranties
1. Warranty of quiet possession. In every contract of
sale the first implied warranty on the part of the
seller is that “the buyer shall have and enjoy
quiet possession of the goods”
 If the quiet possession of the buyer is in any way
disturbed by a person having a superior right than
that of the seller, the buyer can claim damages
from the seller.
2. Warranty of freedom from encumbrances. “the
goods shall be free from any charge in favour of
any third party not declared or known to the
buyer before or at the time when the contract is
made.”
 If the buyer knows about the encumbrance on the
goods at the time of entering into the contract, he
becomes bound by the same and he is not
entitled to claim compensation from the seller for
discharging the same.
3. Warranty of disclosing the dangerous nature of
goods to the ignorant buyer. In case the goods
sold are of dangerous nature he will warn the
ignorant buyer of the probable danger.
 If there is breach of this warranty the buyer is
entitled to claim compensation for the injury caused
to him.