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Conditions and Warranties

The concepts of Conditions and Warranties are fundamental to contracts for the sale of goods, as they define the obligations of the seller and the rights of the buyer. These are governed under Sections 11 to 17 of the Sale of Goods Act, 1930.

1. Conditions

A Condition is defined as a stipulation that is essential to the main purpose of the contract. The breach of a condition gives the buyer the right to:

  • Repudiate the contract.
  • Claim damages.

Characteristics of a Condition

  1. Essential to the Contract:
    • A condition goes to the root of the contract.
  2. Remedies:
    • In case of a breach, the buyer can cancel the contract and seek damages.
  3. Examples:
    • A agrees to sell a specific car to B. If A delivers a different car, it is a breach of condition.

Relevant Section:

  • Section 12(2): Defines a condition as a stipulation essential to the contract's main purpose.

2. Warranties

A Warranty is a stipulation that is secondary to the main purpose of the contract. The breach of a warranty does not entitle the buyer to repudiate the contract but allows them to:

  • Claim damages for the breach.

Characteristics of a Warranty

  1. Collateral to the Contract:
    • A warranty does not affect the essence of the contract.
  2. Remedies:
    • The buyer can only claim compensation and cannot reject the goods or terminate the contract.
  3. Examples:
    • A sells a car to B and promises free servicing for one year. If the free servicing is not provided, it is a breach of warranty.

Relevant Section:

  • Section 12(3): Defines a warranty as a stipulation collateral to the main purpose of the contract.

Key Differences Between Conditions and Warranties

Basis Condition Warranty
Definition A stipulation essential to the contract's main purpose. A stipulation collateral to the contract's main purpose.
Effect of Breach The buyer can repudiate the contract and claim damages. The buyer can only claim damages.
Importance Goes to the root of the contract. Secondary to the main purpose of the contract.
Remedies Rescission of the contract and/or damages. Damages only; the contract remains valid.
Example Selling a car as "new" when it is actually used. Promising free accessories and failing to deliver them.

3. When a Condition May Be Treated as a Warranty (Section 13)

Under certain circumstances, a condition may be treated as a warranty:

  1. Acceptance of Goods:
    • If the buyer accepts the goods despite the breach of condition, they can only claim damages.
  2. Voluntary Waiver:
    • If the buyer voluntarily waives the condition, it becomes a warranty.
  3. Impossible to Fulfill Condition:
    • If the fulfillment of the condition becomes impossible, the buyer may treat it as a warranty and claim damages.

4. Implied Conditions and Warranties (Sections 14 to 17)

The Sale of Goods Act implies certain conditions and warranties in every contract unless expressly excluded:

Implied Conditions

  1. Condition as to Title (Section 14(a)):
    • The seller must have the right to sell the goods.
  2. Condition as to Description (Section 15):
    • The goods must correspond to their description.
  3. Condition as to Quality or Fitness (Section 16):
    • The goods must be fit for the purpose made known to the seller.
  4. Condition as to Merchantability (Section 16(2)):
    • The goods must be of merchantable quality.
  5. Condition as to Wholesomeness:
    • In the case of consumable goods, they must be fit for consumption.

Implied Warranties

  1. Warranty as to Quiet Possession (Section 14(b)):
    • The buyer shall enjoy quiet possession of the goods.
  2. Warranty as to Free from Encumbrances (Section 14(c)):
    • The goods should be free from any charges or encumbrances unknown to the buyer.
  3. Warranty of Quality and Fitness (Section 16):
    • Goods should meet any quality or fitness expectations implied or expressed during the sale.

Summary Table

Aspect Condition Warranty
Importance Essential to the contract's purpose. Collateral to the contract's purpose.
Remedy for Breach Rescind the contract or claim damages. Claim damages only.
Example Goods not matching description. Failure to provide free servicing.
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