CONDITION AND WARRANT UNDER THE SALE OF GOODS ACT

This article is evaluating about the concept of Conditions and Warranties under the Sale of Goods Act, 1930

 

1. INTRODUCTION:

 

The contract of sale of goods is become daily life need and it prevalent in the every corner of the world. All the contracts of Sale of goods are regulated by the Sale of Goods Act, 1930. The Sale of Goods Act had its root from the Indian Contract Act 1872, where the contract of Sale of goods were covered by the Special Contract but along with expansion of the concept the new legislation took place in the years of 1930 i.e., Sale of Goods Act, 1930.  The basic provisions of the Indian Contract Act are also applicable to sales contracts as both laws are complementary to one another.

 

Section 11 to 17 of the Sale of Goods Act 1930 deal with the Condition and Warranties.

 

2. CONDITION AND WARRANTY:

 

CONDITION:

 

Section 12(2) of the Sale of Goods Act, lays down,

“A Condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as stipulated”.

 

WARRANTY:

 

Section 12(3) of the Sale of Goods Act, lays down,

 

“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 right to reject the goods and treat the contract as repudiated”.

 

Further, Section 12(4) of the Act lays down,

 

“Whether a stipulation in a contract of sale is a condition or a warrant depends in each on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract”.

 

In a Contract of Sale of Goods there may be various terms or stipulations. Such stipulations may be either Conditions or Warranties. If a stipulation forms the very basis of the contract, or as stated in Section 12(2), is essential to the main purpose of the contract, it is called a Condition. On the other hand, if the stipulation is not essential to the main purpose of the contract but is only of secondary importance or as Section 12(3) puts it, is collateral to the main purpose of the contract, it is called a Warranty.

 

For example, a lady orders for a blue saree, it is being agreed between her and the seller that it will be sent by a registered parcel, and she will pay the price by 28^th December, the lady of her marriage. In this instance, the stipulation regarding the colour of the saree as well as the date of supply are essential to the main purpose of the contract and are conditions whereas stipulations regarding the time of payment of the price and the mode of despatch of the goods are not essential to the main purpose of the contract but are only collateral, they are warranties.

 

3. 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;

 

• a)  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 repudiate.
• b)   When the contract is not separable and the buyer has accepted the goods or part thereof.

 

4. IMPLIED CONDITIONS AND WARRANTIES:

 

Parties may expressly provide any conditions or warranties in their contract. Apart from what may be provided by the parties in the contract, certain conditions and warranties, as provided in Section 14 to 17 of the Sale and Goods Act, are impliedly there in every contract of sale of goods. The implied conditions and warranties provided in the Act are binding in every contract of sale unless they are inconsistent with any express conditions and warranties agreed to by the parties.

 

The implied conditions and warranties recognized by the Act are being discussed below.

 

IMPLIED CONDITIONS

 

a) Implied Condition as to Title (Section 14(A))

 

Unless the circumstances indicate a different intention in a particular contract of sale, there in an implied condition on the part of the seller that in the case of sale, he has a right to sell the goods and in the case of an agreement to sell, he will have a right to sell the goods at the time when the property in them is to pass.

 

b) Implied Condition in Sale by Description (Section 15)

 

When the goods are sold by description, there is an implied condition that the goods supplied shall correspond with the description. In case the goods are not in accordance with the description, there is a breach of implied condition and the buyer has a right to reject them. He has, however, an option under Section 13 of the Act, to accept the goods by treating the breach of condition as a breach of warranty and claim damages.

 

c) Implied Condition in Sale by Sample as well As Description (Section 15)

 

When the goods are sold by sample as well as description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

 

d) Implied Condition as To Quality or Fitness (Section 16(1))

 

If the requirement as mentioned in Section 16(1) of the Act are satisfied, there is considered to be an implied condition from the side of the seller that the goods supplied shall be reasonably fit for the purpose for which buyers want them:

 

• i.  The buyer, while purchasing the goods, expressly or impliedly, makes known to the seller the particular purpose for which the goods are required by him, so as to show that the buyer relies on the seller’s skill or judgement; and
• ii.  The goods supplied are of such a description which it is in the course of the seller’s business to supply.

 

Section 16(1) of the Act also considers as the first exception to the rule of Caveat Emptor

 

e) Implied Condition of Merchantable Quality (Section 16(2))

 

According to this Sub section, there is a further implied condition in such a case and that is that the goods supplied shall be of merchantable quality. Where –

• i.    The goods are brought by description.
• ii.   From a seller who deals in the goods of that description (whether he is the manufacturer or producer or not)

 

This sub-section also considers as the second exception to the rule of Caveat Emptor.

 

f) Implied Condition in a Sale by Sample (Section 17(2))

 

According to Section 17(2) of the Sale of Goods Act, there are three implied conditions in a Contract of Sale by Sample;

 

• i.  The first implied condition is that the bulk shall correspond with the sample in quality.
• ii.   Another implied condition in a sale by sample is that the buyer shall have a reasonable opportunity of comparing the bulk with sample to satisfy himself that the goods supplied are in accordance with the sample.
• iii. In addition to the implied condition discussed above, there is another implied condition in a sale by sample and that is that the goods shall be free from any defect, rendering them unmerchantable which would not be apparent on reasonable examination of the sample.

 

IMPLIED WARRANTIES

 

a) Implied Warranty of Quiet Possession [Section 14(b)]

 

In a Contract of sale unless the circumstances of the case show different intention, there is an implied warranty that the buyer shall have and enjoy possession of the goods. It means that the buyer’s possession of the goods will not be disturbed.

 

b) Implied Warranty against Encumbrances [Section 14(c)]

 

There is implied warranty that the goods sold shall be free from any charge or encumbrance in favour of any third party. If there is a charge or encumbrance on the goods sold and the buyer has to discharge the same, he is entitled to get compensation for the same from the seller.

 

5. DIFFERENCE BETWEEN CONDITION AND WARRANTY

 

The most significant differences between the concept of Condition and Warranty are as follows;

• i.    Where the fulfilment of the main purpose of the contract depends on the fulfilment of the stipulation, the stipulation is a Condition and where it is not so, the stipulation is only a warranty.
• ii.   Where there is a breach of condition, the contract may be repudiated, and the aggrieved party may refuse to perform his own obligation and either treat the contract as closed, or being an action for breach of contract. but in case of warranty, the contract cannot be repudiated, but a claim for damages may be filed.

 

6. EXCLUSION OF IMPLIED TERMS AND CONDITIONS

 

Section 62 of the Sale of Goods Act, provides that those rights, duties or liabilities which might arise under a contract by implication of law may be negatived or varied –

 

• i.    By express agreement between the parties, or
• ii.   By course of dealing between the parties, or
• iii. By usage, if the usage is such as to bind both parties to the contract.

 

7. CONCLUSION

 

At the end the article we can say that, when buying or selling goods, both the buyer and the seller stipulate certain terms regarding the method of payment, delivery, product quality, quantity, and other essential factors. Depending on the circumstance, these conditions are either viewed as a warranty or a condition. It is important to comprehend these ideas because they safeguard the parties' rights in the event of a breach of contract.