Conditions and Warranties (2nd Chapter).ppt

All the statements made by seller with
reference to goods to convince the buyer to
buy the goods from him.Such representations
may become a part of the contract or may
not.

The representations which become a part of
the contract are called as stipulations. All
those representations which do not form of
part of contract are merely expression of
opinion.A stipulation in a contract of sale
with reference to goods which are the
subject thereof may be a condition or a
warranty.

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 repudiated.
ESSENTIALS OF CONDITION
 Essential to the main purpose of the contract.
 Causes irreparable damage to the aggrieved
party.
 The aggrieved party may:
 rescind the contract
 reject the goods
 recover damages

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 a
right to reject the goods and treat the contract as
repudiated.
ESSENTIALS OF WARRANTY
 Collateral to the main purpose of the contract.
 Causes damage to the aggrieved party.
 The aggrieved party can only claim damages but
cannot repudiate the contract.

 A seller contracted to supply Basmati XI Rice
to a buyer within a month. The seller could
not supply the rice within one month, it
amounted to breach of warranty and buyer
can only claim damages.
 However, if in the same example, the seller
supplied Basmati of some other quantity,
then it amounted to breach of condition,
hence the buyer can repudiate the contract.

Representations
Forming part of the
contract
Not forming part of the
contract
Are called as
stipulations
As to main purpose
of the contract
Collateral to main
purpose of the
contractal
Conditions Sec.
12(2) Warranties Sec. 12(3)
Breach of
Condition
Breach of Warranty
Repudiation of
contract
Claim for Damages
Only expression of
opinion

 When the buyer waives off his right
 Where the buyer affirms the contract
 When the buyer accepts goods non-severable
 Impossibility of performance

 Unless a different intention appears from
the terms of the contract, stipulations as to
time of payment are not deemed to be of
the essence of a contract of sale. Whether
any other stipulation as to time is of the
essence of the contract or not depends on
the terms of the contract.
“Time can not be taken as the essence of the
contract unless the contract expressly
provides for”

Conditions & Warranties
Express Conditions
& Warranties
Implied Conditions
& Warranties
which are agreed upon
between the parties either
spoken or written.
which are applicable
automatically by
operation of law.

1) Condition as to Title [Sec 14(a)]
2) Condition as to Description [Sec 15]
3) Condition as to Sample [Sec 17(2)]
4) Condition as to Sample as well as
Description [Sec 15]
5) Condition as to Quality or Fitness for
Buyer’s purpose [Section 16(1)]
6) Condition as to Merchantability [Section
16(2)]
7) Condition implied by Custom/Usage of
Trade[Sec 16(3) ]

It is the most important implied condition in a
contract of sale that seller has the right to sell the
goods. Seller should be the true owner.
Therefore the condition as to title provides that:
 Seller must have owner of the goods.
 Seller must have the right to sell.
 Seller must not infringe a trade mark or patent.
 Seller acquires the right to sell.
Consequences of Breach of Condition as to title
The aggrieved party may:
 rescind the contract
 reject the goods
 recover damages

Whenever the goods are sold by description, the
implied condition is that the goods shall correspond
with the description.
This includes:
 Where buyer has not seen the goods & relies on
description given by the seller.
 Where buyer has seen the goods but relies on
description given by the seller.
 Packing can be part of description.
Consequences of Breach of Condition as to Description
 recover damages

In a sale by sample there is a implied
condition that the goods shall correspond
with the sample in quality, and the goods
shall be free from the defects which render
them unmerchantable.
Sale by sample has following three
conditions:
(i) Correspondence of Goods with sample in
quality [sec 17(2)(a)]
(ii) Reasonable opportunity of comparing
goods with the sample [Sec 17(2)(b)]
(iii) Merchantability of Goods [Sec 17(2)(c)]

Sometimes, the seller shows sample to the
buyer and also gives him description. In such
case, the implied condition is that the goods
shall correspond with both, the sample as well
description.
Consequences of Breach of Condition as to
Sample as well as Description
 recover damages

This implied condition will be there only if the
following requirements are fulfilled:
(i) The buyer requires goods for a particular
purpose.
(ii) The buyer should make it known to the
seller about that particular purpose.
(iii) The buyer should rely on the seller’s skill
and judgment.
(iv) The seller’s business is to supply such
goods whether he is the manufacturer or
producer or not.

The term merchantability means two things:
(i) If goods are purchased for resale, they
should be immediately re-saleable.
(ii) If goods are purchased for self use then
they should be reasonably fit for the
purpose (Consumption) for which they are
generally used.
(iii) Goods should not be injurious when used.

(i) Warranty as to Quiet Possession [Sec
14(b)]
(ii) Warranty as to Free from charges or
Encumbrance [Sec 14(c)]
(iii) Warranty of disclosing the dangerous
nature of goods to the ignorant buyer

An implied warranty that the buyer shall have
and enjoy quiet possession of the goods.If
the buyer is disturbed as to possession of
goods because of the defective title of the
seller, the buyer can claim damages from
the seller on account of breach of warranty
of quiet possession of goods.

An implied warranty that the goods shall be
free from any charge or encumbrance in
favour of any third party not declared or
known to the buyer before or at the time
when the contract is made.
Example: A sold a property to B on which he used
to pay a charge/fee to a third party. This fact was
not brought to the notice of the buyer, Held, the
buyer if pays charge to the third party can claim
damages from the seller.

An implied warranty as to quality or fitness
for a particular purpose may be annexed by
the usage of trade.

 Condition is a
stipulation which is
essential to the main
purpose of the
contract.
 It is of vital importance
 Warranties are
subsidiary or collateral
to the main purpose of
the contract.
 It is not of vital
importance. The main
contract can be
completed even if
warranty is not
fulfilled.

 In case of breach of
condition, the buyer
may put an end to the
contract.
 A breach of condition
may be treated as a
breach of warranty.
 In case of breach of
warranty, the buyer
cannot put an end to
the contract. He can
only claim damages
from the seller.
 A breach of warranty
cannot be treated as a
breach of condition.

 “Let the buyer beware”
 It is the duty of the buyer to be careful while
purchasing goods of his requirement and in
the absence of the enquiry from the buyer,
the seller is not bound to disclose every
defect in the goods of which he may be
cognizant.

 Misrepresentation by the seller
 Concealment of latent defect
 Sale by description
 Sale by sample
 Sale by sample and description
 Fitness for a particular purpose
 Merchantable quality

Conditions and Warranties (2nd Chapter).ppt

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Conditions and Warranties (2nd Chapter).ppt