Conditions and Warranties

Conditions and Warranties A condition is a stipulation which is essential to the main purpose of the contract. Non-performance of the condition is non-performance of the contract A warranty is a stipulation which is collateral to the main purpose of the contract. Though it must be performed, the failure may lead to breach of warranty and not breach of contract. The affected party may only claim damages and cannot repudiate the contract. ( Eg sale of consumer goods, vehicles –some minor parts—may be replaced when defects are noticed but the vehicle itself cannot be replaced) Breach of condition is a breach of warranty. A breach of warranty is not a breach of condition Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA 9/11/2018

Conditions and Warranties When condition can be treated as a warranty: Voluntary waiver of condition by the buyer Voluntary treatment by the buyer that the breach of condition would be treated as warranty. He cannot change mind again Where a contract of sale is not severable and the buyer has accepted the goods wholly or in part , the breach of condition could only be treated as breach of warranty. Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA 9/11/2018

Conditions and Warranties Express and Implied Conditions and Warranties: Express conditions and warranties are those which are expressly declared or specified in the contract ( Eg Price, Time and place of delivery, etc) Implied conditions and warranties are those which are implied by the Law unless the parties stipulate otherwise. An express warranty or condition does not negate the implied unless the condition or warranty is inconsistent Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA 9/11/2018

Conditions and Warranties Implied conditions Conditions as to title: The seller is supposed to have good title unless contrary is proved Sale by description: Sale by description and specification—the goods would conform to the description and specification Sale by description as well as by sample—The entire goods shall match with the sample – no justification to say the bulk of the goods match with the sample Condition as to quality or fitness: Fitness for a particular purpose: For Eg, Payloaders, JCBs, Heavy Traffic Vehicles, laptop, gas stoves Condition as to merchantability: Goods are commercially saleable with the description commonly known. Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA 9/11/2018

Conditions and Warranties Implied warranties Warranty of quiet and peaceful possession Warranty of freedom from encumbrances Warranty as to quality or fitness by usage of trade Warranty to disclose dangerous nature of goods ( Crackers, Acids, Phenyl, Pesticides, Fungicides)etc IMPORTANT NOTE: Implied conditions or warranties may be negatived or varied by specific contracts by the seller and the buyer or by normal dealing or by customs and practices. Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA 9/11/2018

Rule of Caveat Emptor(page 240) “ Caveat Emptor” means LET THE BUYER BEWARE. In a contract of sale, the seller is not duty bound to disclose all the truth about the goods. Buyers should thoroughly examine before them. They may ask the seller all the clarifications required. If the seller shows the sample and the goods corresponds to the sample, the buyer cannot blame the seller anytime thereafter. In sale of goods on “as is where is” basis, buyer will not have any subsequent claims Exceptions to the above rule: a) Fitness for buyer’s purpose(expressly or by implication) ; b) sale under a patent or a trade name; c) Merchantable quality ( if the buyer has examined the goods); d) Usage of Trade; and e) Consent by fraud Unit II – Sale of Goods Act, Legal Aspects of Business - Mr.K.Mohan Kumar, AP/MBA 9/11/2018