Introduction :
According to Section 12(1) of the Sale of Goods Act, 1930, a stipulation in a contract of sale with references to goods which are the subjects there of may be, A Conditions (Section 12(2)) or A Warranty (Section 12(3)). This article talks about everything you need to know about the Conditions and Warranties under Sale of Goods Act, 1930.
CONDITION :
Meaning and Definition of Condition (Section 12(2))
In common parlance, a condition is an essential requirement of the contract on which the whole contract depends and it that requirement of contract is breached then the sufferer has an absolute right to reject the contract itself.
According to Section 12(2) of the Sale of Goods Act, 1930 :
"A condition is a stipulation essential to the main purpose of the contract, the breach of with gives the aggrieved party a right to treat the contract as repudiated".
In addition, he may maintain an action for damages for loss suffered, if any one the fooling that the whole contract is broken and the seller is guilty of non-delivery.
For example : Ram consults Sham, a motor car dealer for a car suitable for touring purposes to promote the sale of his product. Sham suggest Maruti car and 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 a contract. It is so Vital that it's non-fulfillment defects the very purpose for which Ram purchases the car. Ram is therefore entitled to reject the car and have refund the price.
WARRANTY
Meaning and Definition of Warranty (Section 12(3))
Warranty is the additional stipulation and a written guarantee that is collateral to the main purpose of the contract. The effect of a breach of a warranty is that the aggrieved party cannot repudiate the whole contract however, can claim for the damages. Unlike in the case of breach of condition, in the breach of warranty, the buyer cannot treat the goods as repudiated.
According to Section 12(3) of the Sale of Goods Act, 1930 :
"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 right to reject the goods and treat the contract as repudiated".
It says that the aggrieved party has a right to sue for damages only and not to avoid the contract itself.
For example : Ram buy a new Maruti car from the showroom and the car is guaranteed against any manufacturing defect under normal uses for a period of one year from the date of original purchase and the event of the manufacturing defect there is a warranty for replacement of defective part if it cannot be property repaired. If after 6 month Ram find that the horn of the car is not working he cannot terminate the contract.
The manufacturer can either get it repaired or replaced it with a new horn. Ram gets a right to claim for damages. If any, suffered by him 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 through described in the contract as a warranty, may nonetheless a condition.
Difference Between Conditions and Warranties in Sale of Goods Act
Distinguish Between Condition and Warranty are as follows :
|
Basis Of Difference |
Condition |
Warranty |
|
Meaning |
A condition is a stipulation which is essential to the main purpose
of the contract. |
A warranty is a stipulation which is only collateral or subsidiary to
the main purpose of the contract. |
|
Difference As To Value |
Where stipulation in a contract is essential to a main purpose of the
contract it is a condition. |
If the stipulation is only the collateral to the main purpose of the
contract it is only a warranty. |
|
Difference As To Breach |
A breach of condition gives the aggrieved party a right to sue for
damages as well as the right to repudiate the contract. |
A breach of warranty gives only the right to sue for damages. The contract
cannot be repudiated. |
|
Difference As To Treatment |
A breach of condition may be treated as a breach of warranty in
certain circumstances. |
A breach of warranty cannot be treated as breach of condition. |
When a Condition may be Treated as a Warranty (Section 13)
As a Section 13 of the Sale of Goods Act, 1930, in the following cases a contract is not avoided even on account of a breach of a condition these are :
1. Acceptance of Goods by Buyer -
Where a contract of sale is not severable and the buyer has accepted the goods or part there of, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting, the goods and treating the contract as they repudiated unless there is a term of the contract express or implied to that effect Section 13(2).
2. Voluntary Walver of Condition -
Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may, Walve the condition or Elect to treat the breach of the condition as a breach of warranty (Section 13(1)).
If the buyer once decides to walve the condition he cannot afterwards insist on its fulfillment.
3. Conversion of Condition into Warranty -
Where the buyer elect to trent breach of the condition as a breach of warranty, e.g. he claims damages instead of repudiating the contract.
Express and Implied Conditions and Warranties
The stipulations as to any Implied conditions and warranties may be either :
- Express - They are "Express" when the terms of the contract expressly state them.
- Implied - They are "Implied" when not being expressly provided for.
The law implies them in any particular contract on operation of its own rules. It should however be borne in mind that by virtue of section 16(4) an express condition or a warranty does not negate a condition or warranty implied by law unless it is incompalible there with. Therefore, it follows that a condition or warranty implied by law may be negative or varied by an express agreement or by the course of dealing between the parties or by trade usage. Difference between implied conditions and warranties are as follows :
Implied Conditions in Sale of Goods Act (Implied Conditions)
List of the Conditions that the law treats as implied in the contract of sale, According to the Sale of Goods Act, 1930 the Implied Conditions on the part of seller and buyer includes :
1. Sale by Description (Section 15) :
In a sale by description there is an implied condition 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 description.
If that is required and the goods tendered do not correspond with the description, it would be a breach of condition entitling the buyer to reject the goods. 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. Thus, it has to be determined whether the buyer has undertaken to purchase with goods by their description i.e. whether the description was essential for identifying the goods where the buyer had agreed to purchase.
For example : A at Kolkata sales to B 12 bags of waste Silk on its way from Ahmadabad to Kolkata. There is an implied condition that the Silk shall be such as known in the market as waste silk. If it's not be is entitled to reject the goods.
2. Condition as to Title (Section 14(a)) :
Section 14(a) provides that in a contract of sale unless the circumstances of the contract are such as to show a different intential there is an implied condition on the part of the seller that in the case of a sale, he has a right to sell the goods and that in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass. As a consequence if this, is the title turns out to be defective the buyer is entitled to reject the goods and claim refund of the price plus damages. This will be allowed even where the buyer has used the goods.
For example : X purchase a car from Y. After 6 month Z, the true owner of the car demanded it from X. X had to return it to its true owner. X was entitled to recover the full price even through several month had passed.
3. Condition as to Merchantability (Section 16(2)) :
The expression merchantable quality means that the quality and condition of goods must be such that a man of ordinary prudence would accept them as the goods of that description. Where the goods are bought by description from a seller who deals in goods of the description, there is an implied condition that the goods shall be merchantable quality. Goods must be free from any hidden defect.
For example : Where the gloves supplied contained certain chemicals which could causes skin disease to a person wearing them next to skin, it was held that because of such a defect in the gloves were not of merchantable quality and the buyer was entitled to reject the goods.
4. Condition as to Fitness or Quality (Section 16(1)) :
As a general rule, a buyer is supposed to satisfy himself about the quality of goods he purchases and also he is charged with the responsibility of seeing for himself that the goods suit the purpose for which he buys them. There are however certain exceptions to this information rule. It is only in these exceptional circumstances that there is an implied condition as to quality or fitness. Thus, inter on, if the goods purchase turn out to be unsuitable for the purpose for which he brought them the seller cannot be asked to compensate. These circumstances are as follows :
- The buyer should rely on the sellers skill or judgement.
- The sellers business must be to sell such goods.
- he particular purpose for which the goods are required must have been disclosed by the buyer to the seller.
5. Conditions Implied in Case of sale by Sample (Section 17(1)) :
A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied to that effect. In the case of a contract for sale by sample there is an implied condition that :
- The buyer shall have reasonable opportunity of comparing the bulk with sample. It such an opportunity is not afforded, the buyer may refuse the take the goods.
- The bulk shall correspond with the sample as regards quality.
- The goods shall be free from any defect which renders them unmerchantable and which would not be apparent on a responsible examination of sample.
For example : X bought from Y certain quantity of worsted coating equal to sample. The coating was equal to sample but due to a latent defect the cloth was found to be unfit for making coats. The buyer was entitled to reject the goods because the defect contained in the sample was not apparent on reasonable examination of the sample.
6. Conditions as to Wholesomeness -
Condition as to wholesomeness means that goods shall be fit for human consumption. In 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.
For example : A brought a bottle of beer from B, a dealer in wines. The beer was contaminated with arsenic. A on taking the beer, fell ill. B was held liable to A for the consequent illness.
Implied Warranties in Sale of Goods Act (Implied Warranties)
List of the warranties that the law treats as implied in the contract of sale, Section 14(b) and section 14(c) of the Sale of Goods Act, 1930 lay down implied warranty for a contract of sale of goods. Unless the circumstances of the contract are such as to show a different intention, following are the implied warranties in every contract of sale, Implied warranties under the sales of goods Act, 1930 with examples :
1. Warranty as to Non-Existence of Encumbrances : Section 14(b) :
If the buyer is required to discharge the amount of the encumbrance it shall be breach of this warranty and the buyer shall be entitled to damages for the same. The buyer is entitled to a further warranty that the goods shall be free from any charge of encumbrance in favour of any third party not declared or not to buyer before or at the time when the contract is made.
For example : Ramesh takes loan from Suresh and hypothecated his scooter with Suresh at security. Later on Ramesh sold this scooter to Arun who brought a good faith, here Arun can claim damages from Ramesh because his possession is disturbed by Suresh having a charge.
2. Warranty as to Undisturbed Possession : Section 14(a) :
If the buyer right to possession and enjoyment of the goods is in any way disturbed as consequence's of the sellers defective title, the buyer may sue the seller for damages for breach of this warranty. In every contract of sale unless there is a contrary intention there is an implied warranty that the buyers shall have and enjoy quite possession of the goods.
For example : Ramesh sold second hand scooter to Suraj spend Rs. 100 on the repairs of this scooter. This scooter was sized by the police as it was a stolen one. Suraj field a Suit against Ramesh for the recovery of damages for breach of warranty of quiet possession including the cost of the repairs. It was held that Suraj was entitled to recover the same.
3. Disclosure of Dangerous Nature of Goods :
There 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 and 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.
For example : A sold a tin of disinfectant to B, knowing that it was likely to be dangerous to B, if opened without special care. B opened the tin where upon disinfectant power went into her eyes, causing her injury. Held, A was liable in damages to B, as he failed to warn B of the probable danger.
4. Warranty as to Quality or Fitness by Usage of Trade : Section 16(4) :
An implied warranty as to quality or fitness (Implied warranty of fitness) for a particular purpose may be annexed by the usage of trade.
Doctrine of Caveat Emptor
The term "Caveat Emptor" is a Latin term which means, let the buyer beware. In other words it is no part of the sellers duty to point out defect of the good witch he offers for sale, rather it is the duty of the buyer to satisfy himself about the quality as well as the suitability of the goods.
The person who buys goods must keep his eyes open, his mind active and should be cautions while buying the goods. If he makes a bad choice he must suffer the consequences of lack of skill and judgement in the absence of any misrepresentation or guarantee by the seller.
For example : Pigs where sold subject to all faults and the seller knew that the pigs were suffering from swine fever but he did not inform the buyer about his defect. The seller was not liable for damages because there was no implied warranty.
In Donoghue versus Stevenson (the snail in the ginger beer case) it was held that manufactures owned a duty to the ultimate consumer to take care in making their goods where there is no likelihood of their being examined before they reach the ultimate consumer.
Exceptions to the 'Doctrine of Caveat Emptor'
In certain circumstances, however the Doctrine as no application. They are as follows :
1. In Case of Concealment of Latent Defect -
When the seller has deliberately concealed a defect which is not apparent on the responsible examination of the goods.
2. In Case of Misrepresentation by the Seller -
If the seller has made a false representation relating to the goods and the buyer has relied upon it to his detriment.
3. Merchantable Quality -
In the case of goods bought by description from seller who deals in the class of goods, there is an implied condition that the goods shall be of merchantable quality.
4. Fitness for Buyer's Purposes -
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 the goods are required and relied upon the skill and judgement of the seller there is an implied condition that the goods are reasonably fit for the purpose for which they are required Section 16(1). This is called condition as to fitness.
5. In Case if Sale by Sample -
Where the goods are sold by sample and the goods supplied by the seller do not correspond with sample.
6. In Case of Sale by Description -
Where the goods are sold by description and goods supplied by the seller do not correspond to the description.
7. In Case of Sale by Sample as well as Description -
Where the goods are sold by sample as well as description and goods supplied to not correspond with sample as well as description.