Condition

A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to treat the contract as repudiated.

Warranty

A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated.

Consequences /remedies for breach of condition

Repudiation of contract: The buyer can repudiate the contract.

Waive the condition: The buyer has an option to waive the condition. Once he waives the condition, he cannot afterwards insist on its performance.

Reject the goods: The buyer can reject the goods.

Option to treat condition as warranty and claim damages: Buyer has the option to treat the breach of condition as a breach of warranty. In such a case, he is 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 is compelled to treat the conditions as a breach of warranty, 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 law by reason of impossibility or otherwise, the buyer shall have no remedy against the seller for the breach of the condition.

Consequences/remedies of breach of warranty

Claim for damages: The buyer cannot repudiate the contract. He cannot even reject the goods. He can claim damages for the breach of warranty.

Right of diminution or extinction of price: The buyer may diminish or extinct the price of goods by the amount of damages.

Refuse to pay price: The buyer may refuse to pay price altogether if the loss is more than the price.

Sue for excess loss: The buyer may also sue for the amount of damages which exceeds the price of the goods.

When condition to be treated as warranty

Voluntary waiver: Waiver may be express or implied. A buyer has a right to waive or give up

any 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.

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 only

damages and loses his right to treat the contract as repudiated.

Compulsory treatment: Where the contract is not severable and the

buyer has accepted whole or any part of the goods, the breach of any condition of such contract can only be treated as breach of warranty.

The buyer has no option to repudiate the contract but can claim damages unless there is a term of the contract to that effect.

The term may be express or implied.

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 are expressly 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.

Implied condition

Following are the implied conditions incorporated in the sales of goods act:

Condition as to title: In a contract of sale, there is an implied

condition on the part of the seller that1)In case of sale, he has a right to sell the goods

and 2)In case of agreement to sell, he will have a

right to sell the goods at the time when the property is to pass.

Condition as to description: Where there is a contract for sale of goods by

description, there is an implied condition that the goods shall correspond with the description.

The description may include physical characteristics 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 to reject the goods tendered.

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.

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.

Condition as to quality or fitness: General rule is that there is no implied

condition 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 found unsuitable for his purpose he cannot blame the seller and return them.

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.

Condition implied by custom: An implied condition as to quality or

fitness for a particular purpose may be annexed by the usage of trade.

Implied warranties

Warranty as quiet possession of goods: In every contract of sale, unless there

are intentions to the contrary, there is an implied warranty that the buyer shall have and enjoy quiet possession of the goods.

This warranty assures the buyer that no person will interfere or disturb in his quiet enjoyment and possession of the goods.

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.

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.

Warranty to disclose dangerous nature of goods:

Any person who sells goods which he knows

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.

DOCTRINE OF CAVEAT EMPTOR

The Latin expression ‘caveat emptor’ enunciates the “doctrine of caveat emptor” of English common law.

Caveat emptor means ‘buyer beware’ or buyer take care 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 skill and judgment while buying the goods.

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

Exceptions

Following are the exceptions of doctrine of caveat emptor:

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 seller’s skill or judgment.o The goods are of the description dealt in by the seller,

whether he is the manufacturer or producer.

When the goods are bought by description i.e. merchantable goods: In such case the seller is bound to supply the goods