CONDITIONS AND WARRANTIES UNDER SALE OF GOODS ACT, 1930
Under the Sale of Goods Act, 1930 a condition can be understood as a stipulation which is essential to the main purpose of the contract, the breach of which gives right to repudiate (reject) the contract and to claim damages. On the contrary, a warranty can be understood as a stipulation collateral to the main purpose of the contract, the breach of which does not allow a person to repudiate the contract and only damages can be claimed.
DIFFERENCES BETWEEN CONDITION AND WARRANTY:
|Condition is essential to the main purpose of the contract.||Warranty is just a collateral to the main purpose of the contract.|
|A breach of condition may be treated as a breach of warranty.||A breach of warranty cannot be treated as a breach of condition.|
|Under the stipulation of condition, the aggrieved party can repudiate the contract or claim damages or both.||Under the stipulation of warranty, the aggrieved party can claim only the damages and cannot repudiate the contract.|
A CONDITION CAN BE TREATED AS A WARRANTY UNDER FOLLOWING INSTANCES:
- When a buyer chooses to treat the breach of condition, as a breach of warranty. When this happens then the buyer may claim the damages only and cannot repudiate the contract.
- When a buyer altogether waives off the performance of condition.
- When a contract is non-severable and the buyer has accepted either the whole goods or any part thereof.
- When the fulfillment of any condition or warranty is excused by law by reason of impossibility or otherwise.
In the above-mentioned instances even if there is a breach of condition, a contract cannot be avoided.
EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES:
Conditions and Warranties may be either expressed or implied. “Expressed” stipulation in simple terms can be explained as when the terms of the contract expressly state them, and on the other hand “implied” stipulation can be understood as those which are presumed by law to be present in the contract.
IMPLIED CONDITIONS UNDER THE SALE OF GOODS ACT:
The conditions that are treated as implied in the Sale of Goods Act are as follows:
- Condition as to Title [Section 14(a)]- The condition implied under this section is that the seller has the right to sell the goods at the time when the property is to pass. But if the seller’s title turns out to be defective, then the buyer must return the goods to the true owner of such goods and recover the price of it from the seller.
Example: B purchased a car from C. C was not the real owner of the said car and had defective title to it. Later it was known that it was a stolen car and the real owner demanded to have it back. Here, B had to return the car because no good title was passed to him. Hence, he can sue C for the recovery of the price paid.
- Sale by Description [Section 15]- Under this section it is implied condition that when a contract of sale of goods by description is signed then the good that are being passed to the buyer should match the said description. This is based on the principle that if you contract to sell peas, you cannot compel a buyer to take beans instead. If the goods are different then the buyer is not bound to accept and pay for such goods. As the is a condition the buyer may either repudiate the contract or may claim damages or both.
Example: A went to a mobile store and booked the latest mobile phone and he clearly mentioned the specifics as required, in the contract with special mention of color of the phone that is to be silver. Once he received the package the specifics were fulfilled but the color did not match to the description. Hence, here breach of condition as to description is there and the product can be returned and damages can be claimed or both under this.
- Sale by Sample [Section 17]- In a contract of sale by sample the implied conditions are as follows:
- The bulk of good shall correspond with the sample in quality.
- The buyer shall have a reasonable opportunity to compare the bulk with sample.
- The goods shall be free from defect, which would not be apparent on reasonable examination of sample. This means that the buyer can avoid a contract if the defect in a product is undiscoverable.
Example: A purchased a refrigerator. According to the ordinary examination the refrigerator matched to the sample and A bought the good. Later during installation, the technician said that there was a gas leak which is not discoverable by A during ordinary examination. Here A is entitled to refund of price along with damages.
- Sale by Sample as well as by Description [Section 15]- Under this the implied condition is that the goods supplied must be in correspondence to both the sample and the description. If the said goods match the description but not the sample or vice versa then the buyer has the right to repudiate the contract.
Example: A contract was made between B and C. B agreed to purchase 10 barrels of refined groundnut oil. He described in the contract that the oil must not be mixed and should be of the same quality as the sample provided by C. When the goods were transferred, they were equal to the sample in quality but the oil was mixed with another oil which was a clear breach of description. Here, B can reject the goods.
- Condition as to Wholesomeness- In case of eatables and provisions the implied condition is that the goods must be wholesome. Here wholesome means that the goods should be healthy and good for human consumption. Another implied condition under this is that goods must be merchantable. This means that goods must be of such quality that an ordinary person can accept those goods.
Example: A went to a restaurant with his family. The next day the whole family suffered severe stomachache to which it was found that they had food poisoning. It was discovered that the food served to them was contaminated. Here the restaurant will be liable to pay damages for breach.
- Condition as to quality or fitness [Section 16]- Under this section the condition as to reasonable fitness for a particular purpose may be implied when:
- The buyer has told the seller the purpose of such purchase.
- The buyer is relying on the skills and judgement of the seller and the seller has been in this business and deals with such goods on day-to-day basis.
This condition is not applicable if the goods are sold under a trademark or a patent name.
Example: B went to purchase synthetic gloves because he used to work with hazardous chemicals. He went to a shop which exclusively sold such hand protection gloves for different purposes. He told the purpose of such purchase and bought the suggested gloves but later in time while he was working, he realized that the gloves were not suitable for the type of work he was involved in and that chemicals were absorbed and came in contact with the skin. All this caused B severe skin irritation and chemical burns. Hence B can make the seller liable for refund and ask for damages.
IMPLIED WARRANTIES UNDER SALES OF GOODS ACT:
The warranties that are treated as implied in the Sale of Goods Act are as follows:
- Warranty to undisturbed possession- The buyer shall have a quiet possession of the goods is the implied warranty under this heading. In simple terms if the buyer got the possession of the goods and is later disturbed in such possession then he can sue the seller for breach and can claim damages.
- Warranty as to non-existence of encumbrances- There is an implied warranty that the goods should be free from any encumbrance or burden or charge in favour of any third party. When the contract is made, if the buyer is unaware of such encumbrance, then he can file a suit for recovery of money.
Example: A mortgaged his land to B. On the other hand, he sold the land to D. Here, D can ask A to either clear the loan so that no encumbrance is there or he may pay the money to B himself and later sue A for recovery of the money.
- Disclosure of dangerous nature of goods– Under this the implied warranty is that if a good is inherently dangerous and the buyer is ignorant of such danger then it is the duty of the seller to warn the buyer of any such danger. If there is a breach of this warranty, the seller will be liable to pay damages.
While entering into a contract of sale certain stipulations are made with reference to the goods and these stipulations are ‘conditions’ or ‘warranties’ depending on the structure of the contract. The breach of such stipulations lead to cancellation of the whole contract or damages are claimed or both by the aggrieved party.
Author: Gargi Mishra,
Amity Law School, Student of 3rd Year B.A.LLB(H)