Conditions and warranties in contract law

CONDITIONS AND WARRANTY IN CONTRACT LAW
UNIVERSITY OF PETROLEUM AND ENERGY STUDIES

COLLEGE OF LEGAL STUDIES
DEHRADUN
LAW OF CONTRACT PROJECT

TOPIC: Conditions and Warranty In The
Contract Law
Name Of The Faculty:- Submitted by:-
Prof.Ajit Kaushal
UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 1

CERTIFICATE
This is to certify that the project work entitled Conditions And

Warranty In Contract Law is a bonafide work carried out by
Prashaant Malaviya, Prashant Singh, Nikhil Pandey a student of
Integrated B.A. LLB(H), First Semester of UNIVERSITY OF
PETROLEUM AND ENERGY STUDIES under my guidance and
direction.
This project is the record of the authentic work carried out during the
academic year: 2013-2018.
Signature Of Students:- Signature Of The Faculty:-

DECLARATION
We hereby declare that this report is the work of our

research done on the topic Conditions And Warranty In
Contract Law. This report herein pertains to the study we
have carried out along the support of my mentor and
faculty Prof.Ajit Kaushal . We have put utmost care and
enthusiasm in preparing the same and thus hold that the
data reported is true and valid to our knowledge.
Thanking You

TABLE OF CONTENTS
I. Introduction
II. Definitions Of Terms
III. Types of Condition and Warranty
IV. Condition vs. Warranty
V. Difference between Guarantee and Warranty
VI. Doctrine of Caveat Emptor
VII. Related Cases
VIII. Conclusion

I.INTRODUCTION
An agreement enforceable by law is known as contract according to the Indian Contract law,
1872.Law of contract is very vast and contains many internal subjects to be discussed. Therefore
in the context of law of contract we will be going to discuss about the conditions and warranty in
the law of contract. Condition and Warranty are the terms we regularly hear in our daily life.1
Like for example we can say that if a seller offers some goods to consumer then there are some
conditions that will be applied if the consumer wants to buy that particular good. The literal
meaning of the term condition is the state of something with regard to its appearance, quality or
working order or the other definition could be the circumstances or factors affecting the way in
which people live or work especially to their well-being. According to law, condition means a
future or uncertain event upon the happening of which certain rights or obligations will enlarged,
created or destroyed. According to the legal definition condition is the stipulation which is
essential to the main purpose of contract. It goes to the root of the contrats.Its non-fulfillment
upsets the basis of contract.
Talking about the warranty the literal meaning of the term warranty is justification or valid
grounds for an act or a course of action .According to law the definition is an assurance by the
seller of property that the goods or property are as represented or will be as promised. In simple
words warranty can be explained as for example if a seller sells a product then the consumer gets
a warranty card from the seller in this case the warranty card is the assurance of the product in
which if the product gets damaged in certain time limit as conditions mentioned in the card hen
the consumer can claim for the repair or replacement of the product. This mostly in todays
1 Available at www.chestofbooks.com

scenario. Warranty can also be said a written guarantee issued to the purchaser of an article by its
manufacturer promising to repair or replace it if necessary within a specified period of time.
This segment is basically an extra definition or understanding area and supplies a need long felt
in India. When the agreement enactment was passed the expression "guarantee" had been and
utilized with a few separate significance and shades of importance, and the trouble had been
expanded by some of the aforementioned implications covering a portion of the significance of
the saying 'condition'. The agreement Act utilized the saying "guarantee" in this equivocal sense
and did not characterize it. The effect was that the court needed to settle on the development of
every segment if the expression guarantee was utilized as a part of the strict sense in which it was
, or in the more extensive feeling of the English 'condition', as it was in s 1182. The present
gesture stays away from this confusion and utilizes the statements "condition" and guarantee and
draws a reasonable refinement between the two.
To comprehend the history of "condition" first we need to comprehend what is the foundation of
the statute Sale of Goods Act, 1930. According to the eighth Law Commission Report, the
history of this Act is as takes after: Until the first of July, 1930, the law of offer of products in
India was legislated by Chapter Vii (segments 76 to 123) Legislation of the Indian Contract Act,
1872. The Indian Contract Act itself being dependent upon the English Common Law, the law
identifying with the offer of products in India accompanied the principles of the English
Common Law, incorporating the Law Merchant. The English law of offer of products was
classified in 1893 by the order of the Sale of Goods Act which encapsulated the fundamental
Common Law standards in the wake of acclimating them to help a developing social order.
In India, by 1920 it was considered that the law identifying with the offer of merchandise held in
Chapter Vii of the Indian Contract Act was not satisfactory to help the neighborhood and that a
percentage of the procurements of this extension of the law needed change in the light of new
improvements in trade transactions. The growths to the law settled on by legal choices in
England which were exemplified in the Sale of Goods Act of 1893 were not to be discovered in
the closely resembling procurements held in the Indian Contract Act. It was likewise
acknowledged important to typify the law identifying with offer of products in a divide
institution.

Henceforth, in 1926-27 an exhaustive examination of the case-law bearing on the shares of the
Contract Act managing the offer of merchandise was made by the Legislative Department. As a
consequence of this examination, a draft Bill was ready in 1928. In 1929 a Special Committee
comprising of famous legal counselors inspected the draft Bill and the draft Bill as modified by
this Committee and, therefore, by a Select Committee of the Legislature, was sanctioned as the
Indian Sale of Goods Act, 1930 (Iii of 1930), segment 65 of which canceled Chapter Vii 'of the
Indian Contract Act, 1872.
The Act, as passed, was mostly dependent upon the procurements of the English Act of 1893,
adjusted in the light of consequent legal choices in England and India.
Having precisely Examined the procurements of the scape of Act in the light of legal choices in
India since 1930, the improvement of the law identifying with the offer of products in different
nations, the proposals made by different commercial figures and people and in addition the
prerequisites of the present day welfare State, we have arrived at the conclusion that the
procurements of the Act don't require any radical change.
Notwithstanding now is the ideal time to know the history of Condition and guarantee, which has
an extremely long history in India. We can discovered the same in really popular "Arthasashtra"
composed by the incredible Koutilya or Chanakya in just about fourth Century B.c. Arthasastra is
acknowledged as one of the best book on "investigation of political economy" framework has
ever composed.
Throughout Chandragupta's period, in which Kautilya existed, exceptional exchange practices

were pervasive. For instance, "Goods couldn't be sold at the spot of their birthplace, field or
industrial facility. They were to be conveyed to the named markets (panya sala) where the
merchant needed to announce particulars as to the amount, quality and the costs of his products
which were analyzed and enrolled in the books." Every dealer was instructed to take a permit to
offer. A broker from outside needed to acquire consent. The superintendent of business settled
the entire bargain costs of merchandise as they entered the Customs House. He permitted an edge
of benefit to alter retail costs. Hypothesis and cornering to impact costs were precluded.2
2 See generally, Condition and Warranty In Contract Law of India, Harvard Black
Letter Law Journal , Manish Raj

Therefore, the State exhaust an overwhelming authority regarding ensuring people in general
against out of line costs and fake transactions. There were extreme disciplines for carrying and
defilement of merchandise. Case in point, open health was protected by disciplining debasement
of nourishment results of assorted types, incorporating grains, oils, alkalies, salts, aromas and
meds.
The aged law identifying with guarantees of area was full of subtleties and intricacies; it
involved the consideration of the most famous essayists on the English law, and it was
pronounced by Lord Coke, that the studying of guarantees was a standout amongst the most
inquisitive and finesse learnings of the law; however it is currently of utilization even in
England. The guarantee was a pledge true, whereby the grantor of a bequest of freehold, and his
beneficiaries, were sure to warrant the title; and either upon voucher, or judgment in, a writ of
warrantia chartae, to yield different grounds to the worth of the aforementioned from which there
had been an expulsion by fundamental title the beneficiary of the warrantor was bound just on
condition that he had, as stakes, other lands of equal value by descent.

II.DEFINITION OF TERMS
Condition and warranty.3 -(According to Sales Of Goods Act)
(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may
be a condition or a warranty.
(2) 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.
(3) 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.
(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case
on the construction of the contract. A stipulation may be a condition, though called a warranty in
the contract.
Puff (bargains talk): If no sensible individual listening to this explanation might

consider it important, it is a puff, and no activity in contract is accessible if the
3 See generally Sales of Goods Act 1930.

articulation turns out to be not right. It might likewise be alluded to as "puffery". This is
regular in TV plugs.
Representation: A representation is an explanation of actuality which does not sum to a
term of the agreement however it is one that the producer of the articulation does not
surety its truth. This offers ascent to no contractual commitment however might measure
to a tort, for instance distortion.
Term: A term is comparative to a representation, however reality of the explanation is
ensured by the individual who made the articulation thusly offering ascent to a
contractual commitment. For the reasons of Breach of Contract a term might further be
classifications as a condition, guarantee.
Knowledge and expertise: In Oscar Chess Ltd v Williams, a person selling a car to a
second-hand car dealer stated that it was a 1948 Morris, when in fact it was a 1939 model
car. It was held that the statement did not become a term because a reasonable person in
the position of the car dealer would not have thought that an inexperienced person would
have guaranteed the truth of the statement.
Timing: If the agreement was closed not long after the proclamation was made, this is an
in number implication that the articulation instigated the individual to enter into the
agreement. Slip by of a week inside the arrangements of an auto deal was expected to
remember measure just to a representation in Routledge v Mckay.
Content of articulation: It is important to think about the things that were said in the
given setting, which has nothing to do with the criticalness of a stat.4
Innominate term:Master Diplock, in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen
Kaisha Ltd, made the thought of an innominate term, break of which may or not head off
to the base of the agreement relying on the way of the rupture. rupture of these terms, as
with all terms, will offer ascent to harms. Whether it revokes the agreement hinges on if
lawful profit of the agreement has been evacuated from the honest gathering. Megaw Lj,
in 1970, favored the utilization of the excellent categorising into condition or guarantee
because of lawful assurance. This was deciphered by the House of Lords as only
confining its requisition in Reardon Smith Line Ltd v Hansen-Tangen.
4 See Martin E. and Law, Oxford Dictionary of Law, [London: Oxford University Press
(2006)]

Reasonableness and equitableness: The intimated term must be sensible and fair.
Business efficacy: The intimated term must be essential for the business viability of the
agreement. Case in point, if the term basically makes the agreement work better, that does
not fit this basis. This is the rule laid out in The Moorcock. The managing judge made a
curious thought of a meddlesome onlooker; if the impertinent spectator were to propose a
term and both the gatherings might be liable to answer "goodness, obviously", the term is
suggested.
Obviousness: The term is obvious to the point that it goes without saying. Moreover,
there must be unparalleled one thing that might be suggested by the gatherings. Case in
point, in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales, a
term with respect to the failure of development organization to work three movements a
day couldn't be suggested on the grounds that it was misty what structure it might have
taken. In English Law, This rule was built on account of Spring v Nasds, in the
connection of a Trade Union participation contract.
Clear expression: The term must be fit for clear articulation. No particular specialized
information ought to be needed.
Consistency: The intimated term may not repudiate an express term.

Bilateral contract: It is a reciprocal contract since the property in merchandise hosts to
pass starting with one gathering then onto the next. An individual can't purchase the
merchandise himself.
Transfer of property: The object of an agreement of bargain must be the exchange of

property (significance possession) in products starting with one individual then onto the
next.
Goods: The topic must be a few merchandise price or cash attention: The merchandise
must be sold for some cost, where the products are traded for merchandise it is trade, not
bargain. All vital components of a good contract must be available in an agreement of
bargain.
Existing Goods: Existing products are merchandise which are either claimed or
controlled by the vender around then of the agreement. Offer of merchandise controlled
however not claimed by the dealer might' be by an operator or pledgee.

Contingent Goods: Where there is a contract for the sale of goods, the acquisition of
which by the seller depends upon a contingency5 which may or may not happen - such
goods are known as contingent goods.
III.Types Of Condition And Warranty
Expressed Conditions and Warranty:-
Express conditions and guarantees are which, are explicitly given in the agreement.
Intimated conditions and guarantees are those which are inferred by law or custom; these
ought predominate in an agreement of bargain unless the gatherings consent actually.
i) Condition as to title - In each agreement of deal, unless the circumstances of the

agreement are, for example to show an alternate expectation, there is an intimated
condition from the vender, that :
a. in instance of a deal, he has a right to offer the products, and
b. in instance of a consent to offer, he will have a right to offer the merchandise

when the property is to pass.
The expressions 'right to offer' think over not just that the merchant has the title to what
he implies to offer, additionally that the dealer has the right to pass the property. In the
event that the dealer's title ends up being imperfect, the purchaser might reject the
products.
5 An event that may but is not certain to occur.

ii) Condition as to Description - In an agreement of deal by depiction, there is an

intimated condition that the products might relate with the portrayal. The term " bargain
by portrayal' incorporates the accompanying circumstance;
a. where the purchaser has not seen the merchandise and purchases them depending
on the depiction given by the merchant.
b. where the purchaser has seen the merchandise however he depends not on what
he has seen yet what was expressed to him and the deviation of the products from the
depiction is not obvious.
c. packing of merchandise may at times be a part of the depiction. Where the

products don't adjust to be technique for pressing portrayed (by the purchaser or the
vender) in the agreement, the purchaser can reject the merchandise.
iii) Condition as to Quality or Fitness - Where the purchaser, explicitly or by suggestion,

makes known the merchant the specific reason for which merchandise are needed, in
order to show that the purchaser depends on the vender's ability or judgment and the
products are of a portrayal which it is sometime during the dealer's business to supply
(whether as the producer of maker), there is a suggested condition that the merchandise
ought be sensibly fit for such reason. As such, this state of fitness ought apply, if:
a. the purchaser makes known to the merchant the specific reason for which the
merchandise are needed,
b. the purchaser depends on the merchant's ability or judgment,
c. the merchandise are of a portrayal which he venders usually supplies over the
span of his business, and
d. the merchandise supplied are not sensibly fit for the purchaser's reason.
iv) Condition as to Merchantability - Where the merchandise are purchased by portrayal

from a vender, who bargains in products of that depiction (whether as the producer or
maker) there is a suggested condition that the products might be of merchantable quality.

Merchantable quality conventionally implies that the merchandise ought to be, for
example might be industrially saleable under the portrayal by which they are known in
the business sector at their full worth.
v) Condition as to Wholesomeness - if there should be an occurrence of offer of edible

procurements and foodstuff, there is an alternate suggested condition that the products
ought be wholesome. Therefore, the procurements or foodstuff must compare to their
depiction, as well as be merchantable and wholesome. By "wholesomeness" it implies
that merchandise must be for human utilization.
vi) Condition Implied by Custom or Trade Usage- An inferred guarantee or condition as

to quality or fitness for a specific reason may be affixed by the utilization of exchange. In
certain deal contracts, the reason for which the products are bought may be suggested
from the behavior of the gatherings or from the nature or portrayal of the merchandise. In
such cases, the gatherings enter into the agreement with reference to those known use.
For example, if an individual purchases a perambulator or a solution the reason for which
it is obtained is suggested from the thing itself; the purchaser require not reveal the
reason to the dealer.
vii) Conditions in a Sale by Sample: An agreement of bargain is an agreement available

to be purchased by example where there is a term in the agreement, express or intimated
to that impact. Generally, a deal by specimen is inferred when an example is indicated
and the gatherings plan that the products ought to be of his kind and quality as the
specimen seems to be.
viii) Conditions in a bargain by Sample and by Description: A greater part of situations

where specimens are demonstrated are deals by specimen and in addition by depiction. In
an agreement available to be purchased by specimen and also by depiction, the products
supplied must compare both with the example and in addition with the portrayal.
Implied Warranties:-
A condition turns into a guarantee when -
a) The purchaser waives the conditions or selects to treat the rupture of the condition as a
break of guarantee; or

b) The purchaser acknowledges the merchandise or a part thereof, or is not in a position

to reject the products.
i. Implied Warranty of Quiet Possession - In each agreement of deal, unless there is

an opposite expectation, there is inferred guarantees that the purchaser's might have and
delight in calm ownership of the products. In the event that the purchaser's entitlement to
ownership and pleasure in the products is in any avenue aggravated as results of the
dealer's faulty title, the purchaser might sue the merchant for harms for break of this
guarantee.
ii. Implied Warranty of Freedom from Encumbrances - The purchaser is qualified for
a further guarantee that the merchandise ought be free from any charge or encumbrance
energetic about any unbiased gathering not announced or known to purchaser before or
when the agreement is made. In the event that the purchaser is solicited to release the
measure of the encumbrance it might be a break of this guarantee and the purchaser
should be qualified for harms for the same.
Difference between a condition and a warranty w.r.t. Insurance Law

The meanings of a condition and a guarantee are exceptionally particular in the setting of
protection law. A guarantee could be a condition yet a condition may not be a guarantee.
For the most part, a condition is a key part of an agreement, and if ruptured, the gathering
that has been denied is allowed to claim harms and even end the agreement since the
break has as a result disavowed the agreement. Then again, a guarantee might not be
recognized a basic part of the agreement. In case one of the gatherings to the agreement is
discovered to be in break of the agreement, he or she is at emancipation to make a case in
harms yet this does not imply that the gathering who did not rupture the agreement might
end the agreement. The importance of these terms is turned around in protection law.
Guarantees have more amazing impact in protection law than conditions. A guarantee is a
term of protection get that if the safeguarded has ruptured, the guarantor is no more
extended expected to remember be obligated as of the date of the break. So a break of a
guarantee might refute the protection assert.

Guarantees incorporate guarantees, guarantees of sentiment and promissory guarantees.

Guarantees as swears up and down to relates to truths that the safeguarded consent to do
or not do. Guarantees of supposition are given dependent upon data that the guaranteed
accepts to be correct to the best of his or her information and conviction. A break of this
guarantee might happen if the protected intentionally gave false data to the guarantor.
Promissory guarantees are dependent upon future guarantees or proceeding guarantees
from finished proposal structures or inside the group of the protection arrangement.
A few conditions could be guarantees yet guarantees may not dependably be conditions.
The way of conditions is very convoluted in protection law; and incorporates condition
points of reference, unimportant conditions, guarantees and conditions point of reference.
The heading "Conditions" is conspicuous in most protection approaches. By and large,
this term does not identify with the articulations of certainty or the danger secured inside
the protection approach. They could actually be guarantees, guarantee guarantees or
stipulations.
It is imperative to recognize between guarantees and conditions for numerous
explanations. Case in point, an average state of a protection arrangement is that the
safeguarded must give the guarantor will all apropos data about himself or herself.
Provided that the protected has neglected to do thus, the guaranteed is in break of his or
her approach yet the back up plan is likely not to make a case if the insurance agency
gained this data from an alternate source. Then again, guarantees must be all the more
strictly agreed to for the arrangement to be good. The definitions of a condition and a
warranty are very specific in the context of insurance law. A warranty can be a condition
but a condition may not be a warranty.
Generally, a condition is an essential part of a contract, and if breached, the party that has
been deprived is permitted to claim damages and even terminate the contract because the
breach has in effect repudiated the contract. On the other hand, a warranty would not be
considered a vital part of the contract. In the event that one of the parties to the contract is
found to be in breach of the contract, he or she is at liberty to make a claim in damages
but this does not mean that the party who did not breach the contract would terminate the
contract. The meaning of these terms is reversed in insurance law.
Warranties play a greater part in insurance law than conditions. A warranty is a term of
insurance contract that if the insured has breached, the insurer is no longer held to be

liable as of the date of the breach. So a breach of a warranty would invalidate the
insurance claim.
Warranties include promises, warranties of opinion and promissory warranties.
Warranties as promises relates to facts that the insured agree to do or not do. Warranties
of opinion are given based on information that the insured believes to be true to the best
of his or her knowledge and belief. A breach of this warranty would occur if the insured
knowingly gave false information to the insurer. Promissory warranties are based on
future promises or continuing promises from completed proposal forms or within the
body of the insurance policy.
Some conditions can be warranties but warranties may not always be conditions. The
nature of conditions is quite complicated in insurance law; and includes condition
precedents, mere conditions, promises and conditions precedent. The heading
Conditions is prominent in most insurance policies. In most cases, this term does not
relate to the statements of fact or the risk covered within the insurance policy. They could
in fact be warranties, collateral promises or stipulations.It is important to distinguish
between warranties and conditions for many reasons. For example, a typical condition of
an insurance policy is that the insured must provide the insurer will all pertinent
information about himself or herself. If the insured has failed to do so, the insured is in
breach of his or her policy but the insurer is likely not to make a claim if the insurance
company acquired this information from another source. On the other hand, warranties
must be more strictly complied with for the policy to be valid.
IV.Condition Vs. Warranty6
A term of a Contract may be arranged as a condition or a guarantee.

A term may be a precondition to creation of the agreement (a condition point of
reference) or a precondition to execution (a condition resulting). In this article a condition
point of reference and a condition resulting are both alluded to as a "condition". A
guarantee is a term guarantee to the primary motivation behind the agreement. The
essentialness of the qualification between a condition and a guarantee
is that the break of a "condition" typically qualifies the pure party for
end the Contract and case harms; while the break of a "guarantee"
6 See generally, www.citeman.com

ordinarily qualifies the guiltless gathering for just assert harms.
An illustration of a "condition" is a term that qualifies the Buyer for empty

ownership of the property. Assuming that the Seller is unable to convey empty ownership
also is in break of the condition, then the Buyer might have the right to certify the
Contract and sue for harms for default or sue for particular execution and
on the other hand end the Contract. The cures accessible to the Buyer may be set out in
portion in the Contract what's more may oblige the Buyer to first issue a default notice
needing the broke condition to be satisfied inside a certain time period before practicing
its further rights. A Buyer who ends a Contract after a break of a condition by the
Merchant will typically be qualified for recuperate the store and whatever available funds
paid under the Contract.
A sample of a "guarantee" is the place the Seller warrants or concurs that at

quickly after the date of the Contract characteristic of the property between the date of
the Contract and settlement that the Vender is not eager to amend. In this occasion the
Buyer typically does not have a right to end or delay settlement unless the Contract
furnishes generally.
Rather, the Buyer should settle and independently seek after a case for harms payment
from the Seller. A gathering might as well dependably look for legitimate counsel so it
can rightly recognize the way of a term of a Contract and discover what cures are
accessible in every specific case. Contingent upon the kind of term, the solutions for
break are prone to be truly diverse and the techniques to manage the break are
additionally likely to be different. Some points for the difference that can be done taken
for the distinction between a condition and a warranty are:-
1. Difference as to value: A Condition is a stipulation which is fundamental to

the primary motivation behind the agreement. A guarantee is a stipulation
which is insurance to the fundamental reason.
2. Difference as to Breach: Assuming that there is a break of condition the
abused gathering can revoke the agreement of deal if there should be an
occurrence of a breach of guarantee the wronged gathering can assert harms
just in that case party can claim damages.
3. Difference as to treatment: A breach of condition may be treated as a break of
guarantee. This might happen where the distressed gathering is mollified with

harms just. A break of a guarantee, notwithstanding, can't be treated as a breach

of a condition.
4. In Importance:- Condition: A condition is essential to the main purpose of a
contract. Warranty: Breach of warranty gives right to the party to claim the
damage only.
5. In Rights:- Condition: Breach of condition gives right to the party to reject the
contract. Warranty: Breach of warranty gives right to the party to claim the
damages only.
6. Superiority of Condition:- Condition: A breach of condition may be treated as
a breach of warranty. Warranty: A breach of warranty may not be treated as a
breach of condition.
7. Link with Contract:- Condition: A condition has a direct link with the
essential party of the contract.
Warranty: A warranty has no direct link with the essential part of the contract.
V.Difference Between Guarantee and Warranty7
What is a Guarantee?
A surety is a guarantee made by a merchant or producer to a purchaser that the thing /

administration / item sold is of the best quality and in case the purchaser is not fulfilled or if the
said thing / administration / item does not satisfy this guarantee, the dealer consents to displace it
or discount the purchaser's cash.
A surety gives additional security, far beyond the purchaser's existing legitimate right or
whatever possible extra rights against the dealer. It is dependably free, which implies that
regardless of the possibility that a purchaser does not pay for the assurance, or it is offered free of
expense by a vender, it is lawfully tying on the underwriter. An underwriter can't decline to
furnish a duplicate of the certification provided that you demand one.
Kuttappan Nair, where the terms of the certification authentication furnished "This is to
guarantee that the undermentioned Kenson Watch which has been sold this day is ensured for a
7 See generally, http://info.akosha.com

time of One Year, unless unjustifiably utilized or harmed by mishap, water or sweat", the Kerela
High Court held that such an insurance does mull over swap also and not only overhauling and re
placement as well and not merely servicing and repairing.
What is Warranty?
A warranty is a guarantee of repair and replacement of an item / product or its parts if the product
or service does not meet the reasonable expectations of a buyer or in case any defect is found in
it during the period of the warranty. This is also called an extended guarantee.
A warranty works like a legal contract and is always binding, which means that it can subject the
seller to lawsuits if they do not comply with their promise (i.e. repairing and replacing of articles
or any of its parts). It takes effect only at the termination of any guarantee already being provided
by the manufacturer.
A warranty can be limited by the terms of the contract. Such a limited warranty put conditions on
the parts of an article, the nature of damage incurred and the time period of validity of the
document.
Difference:- A guarantee is basically a commitment on the part of the guarantor to make good
any defects in a product or a service during a fixed period while a warranty mainly pertains to the
repairing of an article or replacing a defective part of an article within the validity period.
One key difference between a guarantee and a warranty is that unlike a guarantee which is
always free, you will need to pay for a warranty to avail the benefit.
The second important difference is that unlike a guarantee which is provided by the
manufacturer, a warranty is usually provided by the retail sellers or distributors.
Consider the following statement: This laptop has a 60-day money-back guarantee and a 2-year
warranty. It means that if the laptop is defective or does not provide the assured standard you

can return it within 60 days and get your money back. However, you can also return it for repair
or replacement of one of its parts if any defect arises within the 2-year warranty period.
Can a relief be provided even after the expiry of the warranty period?
Yes. As said prior, guaranties and warranties give additional assurance, well beyond the
purchaser's existing lawful right or any viable extra rights against the vender. Along these lines, a
purchaser is not left with cure simply in light of the fact that the guarantee/warranty period is
over and he/she might depend on their rights under shopper security laws, etc.
The circumstance on account of M/s Base Corporation Ltd v. M/s Malhotra Auto Centre & Anr is
an illustration of a situation where there was uncertainty in the date of end of the warranty. Here,
one of the litigants gave electric cell base terminals having a warranty of 2 years from the date of
procurement. The terminal got flawed inside a time of six months of the date of deal. The point
when the complainant required a displacement terminal, he was denied this on the ground that
warranty time of the electric cell has lapsed. It was discovered that the respondent had falsely
covered the way that the genuine date of warranty period begins from either the date of bargain
(28.6.2009 here) or from 121stday of dispatch (14.7.2008 here), whichever is prior. The State
Commission held that the litigant enjoyed out of line exchange practice by supplying old
fashioned merchandise to the complainant and subsequently should discount the cost paid, on top
of the remuneration and cost of case.
Dr. Capital Electronics is an alternate later case on this focus. Here, a protest was indexed despite
any precedent to the contrary with respondent after the expiry of the warranty period for a faulty
portable computer gave by Lenovo India Pvt. Ltd. It was contended by the litigant that since the
protest was stopped after the expiry of the time of the warranty, he is under no commitment to
furnish any administration to the complainant or to evacuate the deformities or to remedy the
issues in the portable computer. Dismissing this discord of the respondent, the State Commission
held that, since not, one or the other the litigant or Lenovo India Pvt. Ltd. Had denied that the
imperfections in the said smart phone improved inside the warranty period and sold portable
computer was inadequate, the respondent, having sold such imperfect smart phone was under

lawful commitment to render fitting administration to the complainant by evacuating all such
surrenders from the said portable computer in order to make it useable by the complainant.
When is relief not provided?
If satisfactory after-sales service has been provided by the opposite party
The court in Kelvinator of India Ltd. Obscure denied the offended party any help as shift of the
icebox as acceptable after-deals administration had been furnished by the respondents under the
warranty understanding.
Assuming that a purchaser neglect to cite master prove as to the assembling abandon in a vehicle
acquired. Md. Farhad Hssain & Anr., alluded to the judgment of National Commission, reported
in 2006 and denied the offended party's request for displacement of the auto or discount of its
cost as the Appellant neglected to demonstrate the affirmed assembling abandon in the acquired
auto by illustrating any master sentiment.
An alternate later case is Sri. Thus, the State Commission denied the complainant's claim for
discount of the expense a cruiser as well as consumptions acquired by him in repairing. The
requisition depending upon a few judgments of the National Commission made it extremely
clear that no cure might be furnished to a complainant in the event that he neglects to cite any
proof either oral or documentary or from any master to demonstrate his assertion as to intrinsic
assembling abscond in a vehicle.
VI.DOCTRINE OF CAVEAT EMPTOR
Caveat emptor8, in the law of commercial transactions, principle that the buyer purchases at his
own risk in the absence of an express warranty in the contract.
As a maxim of the early common law, the rule was well suited to buying and selling carried on in
the open marketplace or among close neighbours. The increasing complexity of modern
commerce has placed the buyer at a disadvantage. He is forced to rely more and more upon the
skill, judgment, and honesty of the seller and manufacturer.
8 Let the buyer beware.

The modern law of commercial transactions recognizes this and protects the buyer by implying
various exceptions to the principle of caveat emptor. Thus, in the case of a sale by sample, the
law implies a condition in the contract that the bulk of the merchandise will correspond with the
sample in quality and that the buyer will have a reasonable opportunity to examine the bulk of
the merchandise. Likewise, when the buyer has made known to the seller the particular purpose
for which the goods are required, the law implies a condition in the ensuing contract that the
merchandise is of merchantable (average) quality and reasonably fit for the intended purpose.
By and large, caveat emptor is the property law guideline that controls the offer of true property
after the date of shutting, yet might likewise apply to offers of different products. The expression
Caveat Emptor goes out from the way that purchasers frequently have less data about the
exceptional or administration they are buying, while the vendor has more data. Defects in the
good/service may be escaped by the purchaser, and just known to the vendor. In this manner, the
purchaser may as well beware. This is called data asymmetry.
Under the rule of caveat emptor, the purchaser couldn't recuperate harms from the vendor for
imperfections on the property that rendered the property unfit for common purposes. The main
exemption was if the vendor heartily hid dormant deformities or overall made material
adulterations9 ending up as duplicity. Under the watchful eye of statutory law, the purchaser had
no express guarantee guaranteeing the nature of products. Normal law requires that products
must be "fit for the specific reason" and of "merchantable quality"[citation needed], yet this
suggested guarantee could be troublesome to implement and may not have any significant
bearing to all items. Consequently, purchasers are still encouraged to be careful. The up to date
drift in the U.S, nonetheless, is one of the Implied Warranty of Fitness that applies just to the
offer of new private lodging by a manufacturer merchant and the admonition emptor govern
applies to all other bargain circumstances (i.e. property holder to buyer). Many different wards
have procurements comparable to this. Notwithstanding the nature of the stock, this expression
likewise applies to the return arrangement. In most wards, there is no lawful requirement for the
seller to furnish a discount or trade. By and large, the seller won't give a discount yet will furnish
a credit. In the instances of programming, films and other copyrighted material, numerous
9 To corrupt, debase, or make impure by the addition of a foreign or inferior

substance or element.

merchants will just do an immediate trade for an alternate duplicate of precisely the same title.
Most stores require confirmation of procurement and encroach time constraints on trades or
discounts. Some bigger chain stores will, on the other hand, do trades or discounts at whatever
time, with or without evidence of procurement, in spite of the fact that they for the most part
require a manifestation of picture ID and spot amount or dollar constraints on such returns.
Laidlaw v. Organ, a choice composed in 1817 by Chief Justice John Marshall, is accepted by
researchers to have been the first U.S Matchless Court case which set out the guideline of
proviso emptor in U.S law. In the UK, customer law has moved far from the caveat emptor
demonstrate, with laws passed that have improved shopper rights and permit more amazing slack
to return products that don't meet lawful principles of acceptance. Consumer buys are managed
by the Sale of Goods Act 1979. In the UK, buyers have the right to a full discount for broken
products. Notwithstanding, by assembly, most retail organizations permit clients to return
products inside a specified period (commonly a month or two) for a full discount or a trade,
regardless of the fact that there is no issue with the item. Exemptions might request products sold
as harmed or to clear. Products purchased through 'separation offering', for instance online or by
telephone, likewise have a statutory 'chilling' time of seven working days. To scratch off the
agreement is to treat the agreement as though it had not been made, aside from that the
Regulations allude to the terms. In spite of the fact that no more extended connected in customer
law, the rule of proviso emptor is for the most part expected to remember apply to transactions
between organizations unless it might be indicated that the merchant had a reasonable data
advantage over the purchaser that couldn't have been evacuated via doing sensible due
industriousness.
VII.RELATED CASES
Hong Kong Fir Shipping vs Kawasaki Kisen Kaisha Ltd [1962]10
10 Available at
http://casebrief.wikia.com/wiki/Hong_Kong_Fir_Shipping_Co._Ltd._v_Kawasaki_Kisen_
Kaisha_Ltd.

Hong Kong Fir Shipping vs Kawasaki Kisen Kaisha Ltd is a landmark English contract law case.
It presented the concept of innominate terms, between "warranties" and "conditions". It was
stressed that some terms could lead to either the right to terminate a contract as a remedy or to
the mere entitlement to damages (but with no right to terminate). What counted was not whether
you call a particular contract term a "warranty" or a "condition" but how severe the breach of the
term was.
Facts:
A ship was chartered to the defendants for a 2 year period. The agreement included a term that
the ship would be seaworthy throughout the period of hire. The problems developed with the
engine of the ship and the engine crew was incompetent. Consequently the ship was out of
service for a 5 week period and then a further 15 week period. The defendants treated this as a
breach of condition and ended the contract. The claimants brought an action for wrongful
repudiation arguing the term relating to seaworthiness was not a condition of the contract.
Held:
The defendants were liable for wrongful repudiation. The court introduced the innominate term
approach. Rather than seeking to classify the term itself as a condition or warranty, the court
should look to the effect of the breach and ask if the breach has substantially deprived the
innocent party of the whole benefit of the contract. Only where this is answered affirmatively is
it to be a breach of condition. 20 weeks out of a 2 year contract period did not substantially
deprive the defendants of whole benefit and therefore they were not entitled to repudiate the
contract.
Bettini vs Gye (1876)11
11 Available at http://www.e-lawresources.co.uk/Bettini-v-Gye.php

Bettini vs Gye is an English Contract Law case concerning the right to terminate performance of
a contract. This case mainly deals with the term condition used in the law of contract. A
condition is a term of the contract which is so important that, if it is breached by one party,
allows the other party to declare that the contract is at an end.
Facts:
Bettini agreed by contract to perform as an opera singer for a three month from 30 March to 13
July 1875 for 150 per month at Royal Opera House (Earlier known as Royal Italian Opera,
Covent Garden) and he would not perform in any other opera up to 30 march after signing of
contract. Bettini was supposed to perform concerts or operas. Importantly, Bettini was meant to
be in London without fail 6 days before rehearsals, but did not arrive until 28 March, at which
point he was ready to perform. However, Gye rejected Bettinis performance, sacked him and
replaced him with another opera singer.
Held:
It was held, the provision for arriving 6 days before was not a condition in the contract, and
therefore breach of it did not give rise to the right to terminate. If clear words had stipulated that
in the event Bettini did not show up Gye could terminate. Here Bettini had already performed his
covenant to not sing in the UK in the months running up to 30 March, and not showing for
rehearsals could only affect theatrical performances and singing in duets during the first week or
fortnight. So the breach did not go to the root of the contract, and Gye was not entitled to
terminate.
Poussard vs Spiers & Pond (1876)12
Poussard vs Spiers & Pond is an English contract law case, concerning the classification of
contract terms and wrongful dismissal.
Facts:Madame Poussard entered a contract to perform as an opera singer for three months. She
became ill five days before the opening night and was not able to perform the first four nights.
Spiers then replaced her with another opera singer.
12 Available at swarb.co.uk/poussard-v-spiers-1876/

Held:
Madame Poussard was in breach of condition and Spiers were entitled to end the contract. She
missed the opening night which was the most important performance as all the critics and
publicity would be based on this night.
Bannerman vs White (1861)13
The intention of the parties governs in the making and in the construction of all contracts. If the
parties so intend, the sale may be absolute, with a warranty superadded or the sale may be
conditional, to be null if the warranty is broken.
Facts:
The claimant agreed by contract to purchase some hops to be used for making beer. He asked the
seller if the hops had been treated with sulphur and told him if they had he wouldn't buy them as
he would not be able to use them for making beer if they had. The seller assured him that the
hops had not been treated with sulphur. In fact they had been treated with sulphur.
Held:
The statement that the hops had not been treated with sulphur was a term of the contract rather
than a representation as the claimant had communicated the importance of the term and relied on
the statement. His action for breach of contract was successful.
Chandelor v Lopus14
Chandelor v Lopus is a famous case in the common law of England. It stands for the
distinction between warranties and mere affirmations and announced the rule of caveat
emptor (buyer beware).
Facts:-
A man paid 100 for what he thought was a bezoar stone. This is a stone that forms in
animals' intestinal systems, and was believed to have magical healing properties. The
13 Available at www.legalmax.info
14 Available at www.jstor.org/stable/1321481

seller said he thought it was a bezoar stone, but he also made clear that he could not be
totally certain that it was. The buyer sued for the return of the 100 purchase price.
How the claimant discovered that the bezoar did not work is not discussed in the report.
Held:-
The Exchequer Court held the buyer had no right to his money back, saying "the bare
affirmation that it was a bezoar stone, without warranting it to be so, is no cause of
action."
Shanklin Pier Ltd v Detel Products Ltd15

Shanklin Pier Ltd v Detel Products Ltd is a leading judgment on the subject of collateral
contracts in English contract law. In it the High Court of Justice King's Bench Division
used the principle of collateral contracts, to create an exception to the rule of privity of
contract where a contract may be given consideration by entering into another contract.
Facts:-
Shanklin Pier Ltd hired a contractor to paint Shanklin Pier. They spoke to Detel Products
Ltd about whether a particular paint was suitable to be used, and Detel assured them that
it was, and that it would last for at least seven years. On the basis of this conversation
Shanklin Pier Ltd instructed the contractors to use a particular paint, which they did. The
paint started to peel after three months, and Shanklin Pier attempted to claim
compensation from Detel Products.
Held:-
If a direct contract of purchase and sale of [the paint] had then been made between the
plaintiffs and the defendants, the correct conclusion on the facts would have been that the
defendants gave to the plaintiffs the warranties substantially in the form alleged in the
statement of claim. In reaching this conclusion that an affirmation at the time of sale is a
warranty provided it appear on evidence to have been so intended.
Esso Petroleum Co Ltd v Mardon16
15 Available at www.lawmentor.co.uk/glossary/C/collateral-contract/
16 Available at indiancaselaws.wordpress.com/2013/.../esso-petroleum-co-ltd-v-
mardon/

Esso Petroleum Co Ltd v Mardon is an English contract law case, concerning

misrepresentation. It holds that the divide between a statement of opinion and fact
becomes more factual if one holds himself out as having expert knowledge.
Facts:-
Mr Mardon was buying a petrol station franchised by Esso Petroleum Co Ltd. Esso told
him they had estimated that the throughput of a petrol station in Eastbank Street,
Southport, would be 200,000 gallons a year; however, the local council had made a
decision regarding planning permission which meant that there would be no direct access
from the main street and therefore fewer customers. The estimate provided by Esso did
not take this into account despite their knowledge of the decision. Mr Mardon bought the
petrol station and business did not go well. From 1964, Mr Mardon negotiated a lower
rent with Esso but was still losing money. Esso then brought an action for possession
against Mr Mardon, who counterclaimed for damages of Essos breach of warranty or
negligence under Hedley Byrne.
Lawson J held there was no contractual warranty and damages for negligent misstatement
were limited to losses before 1964. Mr Mardon appealed.
Held:-
The Court of Appeal held that there was no action for misrepresentation as the statement
was an estimate of future sales rather than a statement of fact. However, the claimant was
entitled to damages based on either negligent misstatement at common law or breach of
warranty of a collateral contract.
Photo Production Ltd. v. Securicor Transport Ltd.17
Facts:-
Photo Productions Ltd sued Securicor Transport Ltd after Securicor's employee, Mr
Musgrove, started a fire at Photo Production's factory to warm himself while at work and
accidentally burnt it down, costing 615,000. Securicor argued that an exclusion clause in
its contract meant they were not liable, as it said "under no circumstances be responsible
for any injurious act or default by any employe unless such act or default could have been
foreseen and avoided by the exercise of due diligence on the part of [Securicor]." Photo
Productions argued that the clause could not apply under the doctrine of fundamental
17 Available at www.e-lawresources.co.uk/Photo-Production-v-Securicor.php

breach, that the breach of the contract went to the root of the contract and invalidated the
whole agreement, and extinguished the exclusion clause.
Held:-
The Court of Appeal and held that Securicor's exclusion clause was effective and exempt
it from liability for damage. The clauses effectiveness was a question of construction of
the contract, and that it did cover the damage.
MacPherson v. Buick Motor Co.18
Facts:-
The plaintiff, Donald C. MacPherson, a stonecutter, was injured when one of the wooden
wheels of his 1909 "Buick Runabout" collapsed. The defendant, Buick Motor Company,
had manufactured the vehicle, but not the wheel, which had been manufactured by
another party but installed by defendant. It was conceded that the defective wheel could
have been discovered upon inspection. The defendant denied liability because the
plaintiff had purchased the automobile from a dealer, not directly from the defendant.
Held:-
If the nature of a thing is such that it is reasonably certain to place life and limb in peril
when negligently made, it is then a thing of danger. Its nature gives warning of the
consequence to be expected. If to the element of danger there is added knowledge that the
thing will be used by persons other than the purchaser, and used without new tests, then,
irrespective of contract, the manufacturer of this thing of danger is under a duty to make
it carefully. That is as far as we need to go for the decision of this case. If he is negligent,
where danger is to be foreseen, a liability will follow.
REFERENCES
Web Links:-
http://www.citeman.com/
http://www.helplinelaw.com/
http://info.akosha.com/
18Available at www.law.berkeley.edu/files/MacPherson_2d_Op.pdf

http://indiankanoon.org/
http://www.thevoiceslu.com/
http://peisker.net/
www.britanica.com
http://www.legalindia.in/
www.manupatra.com
www.e-lawsources.co.uk
www.nycourts.gov
www.contractstandards.com
Books:-
Law Of Contract And Specific Relief by Avtar Singh
Law Of Contract by Mulla
Sales Of Goods Act 1930 by Mulla

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CONDITIONS AND WARRANTY IN CONTRACT LAW

UNIVERSITY OF PETROLEUM AND ENERGY STUDIES

LAW OF CONTRACT PROJECT

Name Of The Faculty:- Submitted by:-

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 1

This is to certify that the project work entitled Conditions And

Signature Of Students:- Signature Of The Faculty:-

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 2

We hereby declare that this report is the work of our

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 3

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 4

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 5

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 6

Throughout Chandragupta's period, in which Kautilya existed, exceptional exchange practices

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 7

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Condition and warranty.3 -(According to Sales Of Goods Act)

Puff (bargains talk): If no sensible individual listening to this explanation might

3 See generally Sales of Goods Act 1930.

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 9

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Consistency: The intimated term may not repudiate an express term.

Transfer of property: The object of an agreement of bargain must be the exchange of

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III.Types Of Condition And Warranty

Expressed Conditions and Warranty:-

i) Condition as to title - In each agreement of deal, unless the circumstances of the

a. in instance of a deal, he has a right to offer the products, and

b. in instance of a consent to offer, he will have a right to offer the merchandise

5 An event that may but is not certain to occur.

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 12

ii) Condition as to Description - In an agreement of deal by depiction, there is an

c. packing of merchandise may at times be a part of the depiction. Where the

iii) Condition as to Quality or Fitness - Where the purchaser, explicitly or by suggestion,

b. the purchaser depends on the merchant's ability or judgment,

iv) Condition as to Merchantability - Where the merchandise are purchased by portrayal

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 13

v) Condition as to Wholesomeness - if there should be an occurrence of offer of edible

vi) Condition Implied by Custom or Trade Usage- An inferred guarantee or condition as

vii) Conditions in a Sale by Sample: An agreement of bargain is an agreement available

viii) Conditions in a bargain by Sample and by Description: A greater part of situations

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 14

b) The purchaser acknowledges the merchandise or a part thereof, or is not in a position

i. Implied Warranty of Quiet Possession - In each agreement of deal, unless there is

Difference between a condition and a warranty w.r.t. Insurance Law

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Guarantees incorporate guarantees, guarantees of sentiment and promissory guarantees.

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IV.Condition Vs. Warranty6

A term of a Contract may be arranged as a condition or a guarantee.

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ordinarily qualifies the guiltless gathering for just assert harms.

An illustration of a "condition" is a term that qualifies the Buyer for empty

A sample of a "guarantee" is the place the Seller warrants or concurs that at

1. Difference as to value: A Condition is a stipulation which is fundamental to

UNIVERSITY OF PETROLEUM AND ENERGY STUDIESPage 18

harms just. A break of a guarantee, notwithstanding, can't be treated as a breach

V.Difference Between Guarantee and Warranty7

A surety is a guarantee made by a merchant or producer to a purchaser that the thing /

7 See generally, http://info.akosha.com

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