Express Conditions and Warranties under Sale of Goods Act, 1930

EXPRESS CONDITIONS AND WARRANTIES UNDER SALE OF GOODS ACT, 1930

Meaning of condition and warranty

In a contract of sale of goods there are various stipulations. Such stipulations may either be conditions or warranties. According to Section 12(2) of the Sales of Goods Act, 1930, if a stipulation is essential to the main purpose of the contract, it is called a condition. According to Section 12(3) of the Act if a stipulation is not essential to the main purpose of the contract but is only of secondary importance, then it is called a warranty. There is no definite rule as to which stipulation is a condition and which one is a warranty. It varies from case to case and the Court has to look into the intention of the parties by referring to the terms of the contract and the surrounding circumstances in order to decide whether a stipulation is a condition or a warranty.

Stipulation as to time

According to Section 55 of the Indian Contract Act, if the time of the performance of the contract is of the essence of the contract and the promisor makes a delay in the performance of the contract, the contract is voidable at the option of the promisee. If the time of performance is not of the essence of the contract the delayed performance by the promisor entitles the promise to claim damages only for the loss occasioned to him.

Section 11 of the Act states that the time of payment of the price is not deemed to be of essence of the contract. Therefore, if the buyer makes a delay in the payment of the price the seller cannot avoid the contract on that account but, he can only claim compensation for the same. However the parties could specify that time of payment of the price as an essence of contract. When the same is not agreed to under the contract, one party cannot unilaterally fix the same as being of the essence of the contract.

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Difference between Condition and Warranty

CONDITION WARRANTY
A condition is of primary importance. A condition is of secondary importance.
Breach of condition leads to termination of the contract. In case of a breach of warranty, the injured party is liable to be compensated.
The injured party can refuse to accept the goods as well as claim damages in case of breach of condition. The Injured party can only claim damages in case of breach of warranty.
The injured party can refuse to accept goods not fulfilling the condition of the contract. The Injured party cannot refuse to accept the goods not fulfilling the warranty.
A condition can be treated as a warranty on the wish of the buyer. A warranty cannot be treated as a condition.

 Express conditions and warranties

Express condition or warranty is a stipulation which has been expressly stated in the terms of the contract and has been agreed by both the parties. It is usual practice that parties to Contract of Sale expressly provide conditions and or warranties in their contract. However, in order to protect the interests of the parties, the Sale of Goods Act, 1930 provides for certain implied conditions and warranties from Sections 14 to 17. They are binding in every contract of sale unless the contrary is explicitly agreed to by the parties as stipulated by Section 62 of the Act.

When the buyer buys an article by specifying its patent or other trade name, there is no implied condition of the fitness of the goods for any particular purpose. Since the buyer defines the goods by mentioning the trade name, the seller’s sole duty is that the goods should be of the brand as asked by the buyer. If the buyer mentions the trade name but still relies on the skill and judgment of the seller as regards the suitability of the goods for any particular purpose, the implied condition of fitness is applicable in such a situation.

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In Baldry v. Marshall[1], the plaintiff, who wanted to purchase a motor car, approached the defendants, who were motor car dealers. The plaintiff told the defendants that he wanted a comfortable car suitable for touring purposes. The defendants recommended that the plaintiff purchase a “Bugatti car” for the same which the plaintiff then subsequently bought. The car having been found to be uncomfortable and also unsuitable for touring purposes, the plaintiff wanted to return the car and recover back the purchase money paid by him. It was held that he was entitled to do as the plaintiff while ordering the car by its trade name was still relying on the recommendation of the seller as regards to the suitability of the car for the specific purpose.

According to Section 16(2), the implied condition of merchantability will be excluded when the buyer has examined the goods and the defect in the goods was a patent one. In case of latent defects, the buyer is still protected even if he has examined the goods. Patent defects are those which can be found on examination by a person of ordinary prudence with the exercise of due care and attention. If a merchant possessed of ordinary skill, using due care and diligence, would not have thought of the existence of the particular defect which gives rise to action, such a defect would be latent defect.

Breach of Condition to be treated as a breach of Warranty

Section 13 of the Sale of Goods Act, 1930, provides that breach of a condition is treated as a breach of warranty in the following cases:

  • When the buyer waives the condition or elects to treat it as a breach of warranty and not as a ground for treating the contract as repudiated; or
  • When the contract is not severable and the buyer has accepted the goods or part thereof.
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Remedy for breach of Condition and Warranty

According to Section 59 of the Act, a breach of warranty does not entitle the buyer to reject the goods and his remedies are either to set up against the seller the breach of warranty in diminution or extinction of the price or to sue the seller for damages for breach of warranty. When there is a breach of condition and the buyer intends to treat it as a breach of warranty, he is bound to give a notice to the seller of the same. The amount the buyer has to pay will be the difference between the amount of price payable and the amount of damages recoverable for the breach of warranty. If the however the amount of damages for the breach of warranty is higher than the price payable by the buyer then, he can then sue for the same breach of warranty. Damages for the breach of warranty are to be ascertained in accordance with the provisions of Section 73 of the Indian Contract Act. Thus the damages which naturally arise in the usual course of things can be recovered.

 

[1] (1925) 1 K.B.260

Author: Aditi Shanmugam,
Chettinad School of Law, 2nd year/ Student

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