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Distinction Between Condition and Warranty

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Page 1: Distinction Between Condition and Warranty
Page 2: Distinction Between Condition and Warranty

Distinction between Distinction between Condition and WarrantyCondition and Warranty

Corporate LawCorporate Law

Page 3: Distinction Between Condition and Warranty

Presented byPresented by

Asim HafeezAsim Hafeez Usman NawazUsman Nawaz Umer LodhiUmer Lodhi Akeel AkmalAkeel Akmal Abdur RaufAbdur Rauf

Page 4: Distinction Between Condition and Warranty

Presented to Madam Presented to Madam

Presented toPresented to

Madam Urooj BashirMadam Urooj Bashir

Page 5: Distinction Between Condition and Warranty

Condition and Warranty DefinedCondition and Warranty Defined

A condition is a A condition is a StipulationStipulation “essential”“essential” to the main purpose of to the main purpose of the contract the breach the contract the breach of which gives the of which gives the aggrieved party a rightaggrieved party a right

To repudiate the To repudiate the contractcontract

And to maintain an And to maintain an action for damages for action for damages for loss sufferedloss suffered

A warranty is a A warranty is a StipulationStipulation “Collateral”“Collateral” to the to the main purpose of the main purpose of the contract, the breach of contract, the breach of which gives the which gives the aggrieved party a aggrieved party a rightright

To sue for damages To sue for damages onlyonly

And not to avoid the And not to avoid the contract itself contract itself

Page 6: Distinction Between Condition and Warranty

Distinction between Condition and Distinction between Condition and WarrantyWarranty

ConditionCondition

1.1. As to ValueAs to Value A condition is a A condition is a

Stipulation Stipulation essential to the essential to the main purpose of main purpose of the contract the contract

WarrantyWarranty

1.1. As to ValueAs to Value A warranty is a A warranty is a

Stipulation Stipulation collateral to the collateral to the main purpose of main purpose of the contractthe contract

Page 7: Distinction Between Condition and Warranty

Distinction between Condition and Distinction between Condition and WarrantyWarranty

ConditionCondition

2.2. As to BreachAs to Breach The breach of The breach of

condition gives condition gives the aggrieved the aggrieved party a right to party a right to repudiate the repudiate the contract as well as contract as well as claim damagesclaim damages

WarrantyWarranty

2.2. As to BreachAs to Breach The breach of The breach of

warranty gives warranty gives the aggrieved the aggrieved party a right to party a right to claim damages claim damages onlyonly

Page 8: Distinction Between Condition and Warranty

Distinction between Condition and Distinction between Condition and WarrantyWarranty

ConditionCondition

3.3. As to TreatmentAs to Treatment A breach of A breach of

condition may be condition may be treated as a treated as a breach of warrantybreach of warranty

WarrantyWarranty

3.3. As to TreatmentAs to Treatment A breach of A breach of

Warranty cannot Warranty cannot be treated as be treated as breach of breach of conditioncondition

Page 9: Distinction Between Condition and Warranty

DescriptionDescription

There is no hard and fast rule as to There is no hard and fast rule as to which stipulation is a condition and which stipulation is a condition and which one a warranty. which one a warranty.

Sec 12(4) explainsSec 12(4) explains

““whether a stipulation in a contract of whether a stipulation in a contract of sale is a condition or a warranty sale is a condition or a warranty depends in each case upon the depends in each case upon the construction of the contract”construction of the contract”

Page 10: Distinction Between Condition and Warranty

DescriptionDescription

The Court therefore is not to be guided by The Court therefore is not to be guided by the terminology of the parties but has to the terminology of the parties but has to look to the intention of the parties by look to the intention of the parties by referring to the terms of the contract, its referring to the terms of the contract, its construction and the surrounding construction and the surrounding circumstances to judge whether a circumstances to judge whether a stipulation was a condition or a warranty.stipulation was a condition or a warranty.

The most suitable test to distinguish The most suitable test to distinguish between the two is that if the stipulation is between the two is that if the stipulation is such that its breach would be fatal to the such that its breach would be fatal to the rights of the aggrieved party, then such a rights of the aggrieved party, then such a stipulation is a condition and where it is stipulation is a condition and where it is not so the stipulation is only a warranty.not so the stipulation is only a warranty.

Page 11: Distinction Between Condition and Warranty

Implied ConditionsImplied Conditions

1 Condition as to title 1 Condition as to title Sec. 14(a). Sec. 14(a). In every contract of sale, the first implied In every contract of sale, the first implied

condition on part of the seller is that, in the condition on part of the seller is that, in the case of a sale, he has the right to sell the case of a sale, he has the right to sell the goods and that, in the case of an goods and that, in the case of an agreement to sell, he will have the right to agreement to sell, he will have the right to sell the goods at the time when the sell the goods at the time when the property is to pass. Ordinarily the seller has property is to pass. Ordinarily the seller has the right to sell the goods if either he is the the right to sell the goods if either he is the owner of the goods or he’s owner’s agent.owner of the goods or he’s owner’s agent.

Page 12: Distinction Between Condition and Warranty

Implied ConditionsImplied Conditions

2. Sale by description2. Sale by description In a contract of sale of goods by In a contract of sale of goods by description; it is an implied condition description; it is an implied condition that the goods shall correspond with that the goods shall correspond with the description. If the goods are not the description. If the goods are not according to the description, the buyer according to the description, the buyer can reject the goods. If the seller can reject the goods. If the seller supplies different goods, the buyer is supplies different goods, the buyer is not bound to accept such goods.not bound to accept such goods.

Page 13: Distinction Between Condition and Warranty

Implied ConditionImplied Condition 3. Sale by Sample3. Sale by Sample in case of sale by sample, the goods must in case of sale by sample, the goods must

be supplied according to a sample agreed. It be supplied according to a sample agreed. It is subjected to the following conditions Sec is subjected to the following conditions Sec 17.17.

the bulk shall correspond with the sample in the bulk shall correspond with the sample in quality.quality.

the buyer shall have reasonable opportunity the buyer shall have reasonable opportunity to compare the bulk with the sample.to compare the bulk with the sample.

the goods shall be free from any defect, the goods shall be free from any defect, rendering them unmerchantable, which rendering them unmerchantable, which would not be apparent on reasonable would not be apparent on reasonable examination of the sample.examination of the sample.

Page 14: Distinction Between Condition and Warranty

Implied ConditionsImplied Conditions

4. Sale by Sample as well as by 4. Sale by Sample as well as by DescriptionDescription

When the goods are sold by sample as When the goods are sold by sample as well as by description, there is an well as by description, there is an implied condition that the bulk of the implied condition that the bulk of the goods shall correspond with the goods shall correspond with the sample and the description. sample and the description.

Page 15: Distinction Between Condition and Warranty

Implied ConditionsImplied Conditions

5. Condition as to fitness or quality5. Condition as to fitness or qualityThis condition applies if the following This condition applies if the following

requirements are fulfilled requirements are fulfilled a.a. The buyer should inform the seller The buyer should inform the seller

about the purpose of the goodsabout the purpose of the goodsb.b. The buyer should rely on seller’s The buyer should rely on seller’s

skill and judgmentskill and judgmentc.c. The seller must be a dealer in the The seller must be a dealer in the

goods of that typegoods of that type

Page 16: Distinction Between Condition and Warranty

Implied ConditionsImplied Conditions

6. Condition as to Merchantability6. Condition as to MerchantabilityThe term “Merchantable” means that The term “Merchantable” means that

the goods must be fit for the purpose the goods must be fit for the purpose for which such goods are used. Where for which such goods are used. Where goods are bought by description from goods are bought by description from seller who deals in goods of that seller who deals in goods of that description whether he be the description whether he be the manufacturer or not the implied manufacturer or not the implied condition is that the goods shall be of condition is that the goods shall be of merchantable quality.merchantable quality.

Page 17: Distinction Between Condition and Warranty

Implied ConditionsImplied Conditions

7. Condition as to Wholesomeness7. Condition as to Wholesomeness

““Wholesomeness” means beneficial for Wholesomeness” means beneficial for health. This condition applies only in health. This condition applies only in contract of sale of eatables and contract of sale of eatables and provisions. In such cases goods must provisions. In such cases goods must not only be merchantable but not only be merchantable but wholesome too. wholesome too.

Page 18: Distinction Between Condition and Warranty

Implied WarrantiesImplied Warranties

1. Quiet Possession 1. Quiet Possession

It is an implied condition that the It is an implied condition that the buyer shall have and enjoy quiet buyer shall have and enjoy quiet possession of the goods. If the quite possession of the goods. If the quite possession of the buyer is disturbed possession of the buyer is disturbed by any other person having a by any other person having a superior title than the seller, he can superior title than the seller, he can claim damages from the sellerclaim damages from the seller

Page 19: Distinction Between Condition and Warranty

Implied WarrantiesImplied Warranties

2. Freedom from encumbrances 2. Freedom from encumbrances

It is implied warranty on the part of the It is implied warranty on the part of the seller that, the goods shall be free seller that, the goods shall be free from any encumbrance or charge in from any encumbrance or charge in the favor of a 3the favor of a 3rdrd party. If the party. If the possession of the buyer is disturbed possession of the buyer is disturbed due to such charge in favor of 3due to such charge in favor of 3rdrd party, he can claim damages. party, he can claim damages.

Page 20: Distinction Between Condition and Warranty

Implied WarrantiesImplied Warranties

3. Usage of trade3. Usage of trade

An implied warranty on the part of the An implied warranty on the part of the seller as to quality or fitness for a seller as to quality or fitness for a particular purpose may be annexed particular purpose may be annexed by the usage of trade.by the usage of trade.

Page 21: Distinction Between Condition and Warranty

Implied WarrantiesImplied Warranties

4. Disclosure of Dangerous Goods 4. Disclosure of Dangerous Goods

The implied warranty on the part of the The implied warranty on the part of the seller is that if the goods are of a seller is that if the goods are of a dangerous nature he shall warn the dangerous nature he shall warn the ignorant buyer of the probable ignorant buyer of the probable danger. In case of breach of this duty danger. In case of breach of this duty he shall be liable to buyer for he shall be liable to buyer for damaged caused to him by the damaged caused to him by the reason of the breach of the sellerreason of the breach of the seller

Page 22: Distinction Between Condition and Warranty

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