condition & warranties

7/30/2019 condition & warranties

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Condition

A condition is a stipulation essential tothe main purpose of the contract, thebreach of which gives rise to treat the

contract as repudiated.


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Warranty

A warranty is a stipulation collateral to the mainpurpose of the contract, the breach of whichgives rise to a claim for damages but not to aright to reject the goods and treat the contractas repudiated.


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Consequences /remedies for breach

of condition

Repudiation of contract: The buyer canrepudiate the contract.

Waive the condition: The buyer has anoption to waive the condition. Once he

waives the condition, he cannot

afterwards insist on its performance.

Reject the goods: The buyer can rejectthe goods.


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Option to treat condition as warranty and claimdamages: Buyer has the option to treat the breach ofcondition as a breach of warranty. In such a case, heis entitled to claim damages for loss caused due to

breach of condition. Compulsion to treat the condition as warranty and

to claim damages: In such a cases a buyer iscompelled to treat the conditions as a breach ofwarranty, the buyer may sue the seller for damages for

the same. No remedy when the seller is excused by law:

Where the fulfillment of a condition is excused by lawby reason of impossibility or otherwise, the buyer shallhave no remedy against the seller for the breach of thecondition.


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Consequences/remedies of breach

of warranty

Claim for damages: The buyer cannotrepudiate the contract. He cannot even

reject the goods. He can claim damages

for the breach of warranty.

Right of diminution or extinction ofprice: The buyer may diminish or extinct

the price of goods by the amount ofdamages.


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Refuse to pay price: The buyer mayrefuse to pay price altogether if the loss

is more than the price.

Sue for excess loss: The buyer mayalso sue for the amount of damages

which exceeds the price of the goods.


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When condition to be treated as

warranty

Voluntary waiver:

Waiver may be express or implied.

A buyer has a right to waive or give upany condition of contract of sale.

If he waives any condition, he agrees to

accept defective goods. It should be noted that a party may

always waive a condition which is for

own benefit.


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Voluntary election:

A buyer has an option to elect the breach of a

condition as breach of warranty.

If a buyer elects this option, he can claim onlydamages and loses his right to treat the contract

as repudiated.


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Compulsory treatment:

Where the contract is not severable and thebuyer has accepted whole or any part of the

goods, the breach of any condition of suchcontract can only be treated as breach ofwarranty.

The buyer has no option to repudiate the

contract but can claim damages unless thereis a term of the contract to that effect.

The term may be express or implied.


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Types of condition and warranties

In contract of sale, conditions and warranties

may be of two types:

Express conditions and warranties: These are

those conditions and warranties which areexpressly agreed upon by the parties in the

contract of sale.

Implied condition and warranties: These are

those warranties which are implied by the law

or imposed by the law on the seller.


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Implied condition

Following are the implied conditions incorporatedin the sales of goods act:

Condition as to title:

In a contract of sale, there is an impliedcondition on the part of the seller that

1)In case of sale, he has a right to sell the goodsand

2)In case of agreement to sell, he will have aright to sell the goods at the time when theproperty is to pass.


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Condition as to description:

Where there is a contract for sale of goods bydescription, there is an implied condition that

the goods shall correspond with thedescription.

The description may include physicalcharacteristics like class or grade, trade

marks, brand name label, etc.. If the goods are not according to the

description then the buyer has full right toreject the goods tendered.


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Condition as to sample:

When the sale is made by showing a

sample, the implied condition is that the

goods supplied shall be of the kind and

quality as the sample is.


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Condition as to sample as well as

description:

Where the goods are sold by sample as

well as description, the implied authority

is that the goods must correspond with

both.

If not, the buyer con reject the goods.


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Condition as to quality or fitness:

General rule is that there is no impliedcondition as to quality or fitness for any

particular purpose of goods supplied. The buyer himself must ensure that the

goods suits his purpose before he buys.

If the goods are subsequently foundunsuitable for his purpose he cannotblame the seller and return them.


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Condition as to merchantable quality:

Where goods are bought by description

from the seller who deals in goods of that

description, there is an implied condition

that the goods shall be of the

merchantable quality.

Merchantable goods are also free from

latent defects.


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Condition implied by custom:

An implied condition as to quality or

fitness for a particular purpose may be

annexed by the usage of trade.


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Implied warranties

Warranty as quiet possession of goods:

In every contract of sale, unless thereare intentions to the contrary, there is an

implied warranty that the buyer shallhave and enjoy quiet possession of thegoods.

This warranty assures the buyer that noperson will interfere or disturb in his quietenjoyment and possession of the goods.


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Warranty as to freedom from charge or

encumbrance:

In a contract of sale, there is also an

implied warranty that the goods shall be

free from any charge or encumbrance in

favour of third party.


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Warranty as to quality or fitness by

usage of trade:

In every contract of sale, an implied

warranty as to quality or fitness of goods

for a particular purpose may be annexed

by the usage of trade.


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Warranty to disclose dangerous nature

of goods:

Any person who sells goods which he

knows


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Warranty to disclose dangerous nature

of goods:

Any person who sells goods which he

knows to be dangerous, he must warn

the buyer of the probable danger.

If he sells without giving fair warning to

the buyer, he is liable for the

consequences.


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DOCTRINE OF CAVEAT EMPTOR

The Latin expression caveat emptorenunciates thedoctrine of caveat emptorof English common law.

Caveat emptormeans buyer beware or buyer takecare but does not mean that the buyer must take

chance. The doctrine of caveat emptor is based on the

presumption that a buyer relies on and uses his skilland judgment while buying the goods.

If the buyer distrusts his own skill or judgment, he mayask the seller to give a guarantee or warranty.


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Exceptions

Following are the exceptions of doctrine of caveatemptor:

When purpose of buying is made known to the seller:In such a case seller is under a duty of the buyer

subject to the following three conditions:o The buyer makes known to the seller the particular

purpose for which the goods are required.

o The buyer relies on the sellers skill or judgment.

o The goods are of the description dealt in by the seller,whether he is the manufacturer or producer.


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When the goods are bought by

description i.e. merchantable goods: In

such case the seller is bound to supply

the goods

condition & warranties

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