Conditions & WarrantiesDoctrine of Caveat Emptor

A CONDITION has been defined as a stipulation essential to the main purpose of the contract ; the breach of which gives rise to a right to treat the contract as having been repudiated.

A WARRANTY has been defined as a stipulation collateral to the main purpose of the contract ;The breach of which gives rise to a claim for damages but to a right to reject the goods and treat the contract as having been repudiated.

Ram consults Sham, a motorcar dealer for a car suitable for touring purposes to promote the sale of his product. Sham suggests Toyota Qualis and Sham accordingly buys it from Sham.The car turns out to be unfit for touring purposes. Here the term that the car should be suitable for touring purposes, is a CONDITION of the contract. It is so vital that the non-fulfillment defeats the very purpose for which Ram purchased the car. Ram is entitled to reject the car and have refund of the price.

Lets assume Ram buys a new Qualis from the show room and it comes with a guarantee against any manufacturing defect under normal usage for a period of one year from the date of original purchase and in the event of any manufacturing defect there is a warranty for replacement of defective part of it if it cannot be properly repaired.If after six months Ram finds that the horn of the car is not working , he cannot terminate the contract ; BUTGet it either repaired or replaced from the Company Here Ram gets a right to claim for damages, if any, BUT NOT the right of repudiation.

Whether a stipulation is a CONDITION or a WARRANTY depends, in each case, on the CONSTRUCTION OF CONTRACT.A stipulation, though described in the contract as WARRANTY, may be nonetheless by a CONDITION.

Condition v.WarrantyA CONDITION is a stipulation essential to the main purpose of the contract ; whereasA WARRANTY is a stipulation which is collateral to the main purpose.Breach of a CONDITION gives the right to the aggrieved party to repudiate the contract ; butIn case of breach of a WARRANTY, the aggrieved party can claim damages only.3.A breach of CONDITION may be treated as a breach of WARRANTY and hence no repudiation of contract BUT breach of WARRANTY cannot be treated as a breach of CONDITION.

Express and Implied CONDITIONS & WARRANTIES : (Sec.14-17)Conditions and Warranties may be eitherExpress, orImplied .They are express, when the terms of the contract expressly state them.And implied, when, not being expressly provided for. The law implies them in any particular contract on operation of its own rules.

Implied ConditionsCondition as to title :[Sec.14(a)]An implied condition that the seller has the right to sell the goods in the case of sale and will have the right of sale in the case of an agreement to sell them at a time when the property is to pass.Should the title be defective, the buyer is entitled to reject the goods and claim damages.

Sale by description (sec.15)Here the implied condition is that the goods shall correspond with the description, and if the sale is by sample as well as by description, the goods must not only correspond with the sample but also with the description.It is a condition which goes to the root of the contract and the breach of it, entitles the buyer to reject the goods whether the buyer is able to inspect them or not.

Condition as to quality of fitness Sec. 16 of the Act provides that there is no implied condition or warranty as to the quality or fitness of the goods sold for any particular purpose.This is the fundamental principle of the law of sales of goods, The Caveat Emptor, i.e., let the buyer beware.

Caveat Emptor Means let the buyer beware.It is no part of the sellers duty in contract of sale of goods to give the buyer an article suitable for a particular purpose ; orOf a particular quality ; unlessSuch quality or fitness is made an express term of the contract.The person who buys goods must keep his eyes open, his mind active, and should be cautious while buying the goods.

If he makes a bad choice, he must suffer the consequences of lack of skill and judgment in the absence of any misrepresentation or guarantee by the seller.The general rule of the common law in regard to quality or fitness under a contract of sale is that except in cases of fraud, the buyer purchases at his own risk relying upon his own skill and judgment unless there has been a condition or warranty.This is expressed by the maxim caveat emptor, which means, the buyer must take care and if the buyer distrusts his own judgment or skill, he may require seller to give a warranty.

Exceptions to the doctrine of Caveat EmptorThere are certain circumstances, where this maxim has no application. They are as follows :If the seller has made a false representation relating to the goods and the buyer has relied upon it to his detriment ;When the seller has deliberately concealed a defect which is not apparent on the reasonable examination of the goods ;When the seller is a manufacturer or a dealer of the type of goods, sold by him and the buyer has communicated to him the purpose for which it is

Required and relied upon the skill and judgment of the seller, there is an implied condition that the goods are reasonably fit for the purpose for which they are required .The exception, does not apply if the goods are bought under the patent or trade name ;If goods are bought by description, then there is an implied condition that the goods shall be of merchantable quality, [Sec.16(2)]When goods are bought by sample then they should correspond with the sample and the buyer must have reasonable opportunity of inspecting the goods ; and

If trade usage attached an implied warranty or a condition as regards quality of goods.Quality of goods includes their state or condition.[Sec.2(12)]

Conditions implied in case of Sale by sample (Sec.17)The bulk shall correspond with the sample as regards qualityThe buyer shall have reasonable opportunity of comparing the bulk with the sampleThe goods shall be free from any defect which render them unmerchantable; and which would not be apparent on a reasonable examination of sampleIn the case of sale by sample as well as by description, the goods must correspond both with the sample & the description

Conditions as to WholesomenessIn the case of eatables and provisions, in addition to the implied condition as to merchantability, there is another implied condition that the goods shall be wholesome

Implied WarrantiesWarranty as to undisturbed possessionAn implied warranty that the buyer shall have and enjoy quiet possession of the goods.The buyer, having got the possession of the goods, is later on disturbed in his possession, he is entitled to sue the seller for the breach of the warranty, unless the circumstances of the contract show a different intention.

(b) Warranty as to non-existence of encumbrancesAn implied warranty that the goods shall be free from any charge or encumbrance in favor of any third party not declared or known to the buyer before or at the time the contract is entered into.

(c) Disclosure of Dangerous Nature of GoodsThere is another implied warranty on the part of the seller that in case the goods are inherently dangerous or they are likely to be dangerous to the buyer & the buyer is ignorant of the danger, the seller must warn the buyer of the probable danger.If there is a breach of this warranty, the seller will be liable in damages.

Summary: While entering into a contract of sale, certain stipulations are put by both the parties, such as time for payment of price, time for delivery, quality of goods, transfer of title, etc. these stipulations with reference to goods may be conditions or warranties depending upon the construction of the contract. A stipulation essential to the main purpose of the contract is a condition whereas collateral stipulations are called warranties.

Breach of a condition, and that of a warranty, have different consequences.Every contract of sales, have certain conditions and warranties, implied by law.Besides, the party may provide for conditions and warranties by an express agreement.Regarding implied condition or warranty as to the quality of fitness for any particular purpose of goods supplied, the rule is Let the Buyer Beware, i.e., the seller is under no duty to reveal unflattering truths about the goods, but this rule has certain exceptions.