“IMPLIED CONDITIONS AND ITS EFFECT”

A Project submitted in partial fulfilment of the course CONTRACTS-II,

3rd SEMESTER during the Academic Year 2019-2020

SUBMITTED BY:

ABHISHEK KUMAR

Roll No. – 1902

B.A. LL.B(Hons.)

SUBMITTED TO:

DR. VIJAY KR. VIMAL

FACULTY OF CONTRACTS-II

SEPTEMBER, 2019

CHANAKYA NATIONAL LAW UNIVERSITY, NAYAYA NAGAR,

MEETHAPUR, PATNA-800001

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 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.A.LL.B (Hons.) Project Report Entitled
“IMPLIED CONDITIONS AND ITS EFFECT” submitted at Chanakya National Law
University, Patna is an authentic record of my work carried out under the supervision of Dr.
Vijay Kr. Vimal. I have not submitted this work elsewhere for any other degree or diploma. I
am fully responsible for the contents of my Project Report.

(Signature of the Candidate)

ABHISHEK KUMAR
Chanakya National Law University, Patna

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 ACKNOWLEDGEMENT

Firstly, I would like to thank my faculty of CONTRACTS-II, Dr. Vijay Kr. Vimal for
providing me an opportunity to make my project on such an interesting topic which is also a
contemporary issue as for now.
Secondly, I would like to thank all my colleagues and friends for helping me out in arranging
of the accumulated collected study material.
Lastly, special thanks to my parents for guiding me in giving the final touch to this project
and helping me out throughout this project.

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 Table of Contents

INTRODUCTION ................................................................................................................ 5

1. IMPLIED CONDITIONS AND WARRANTIES ........................................................... 8

2. IMPLIED CONDITIONS ............................................................................................ 10

3. IMPLIED WARRANTIES ........................................................................................... 12

3.1 DIFFERENCE BETWEEN CONDITIONS AND WARRANTY .......................... 12

4. JUDICIAL INTERPRETATIONS AND EFECTS ....................................................... 14

5. CONCUSION .............................................................................................................. 19

BIBLIOGRAPHY ............................................................................................................... 20

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 INTRODUCTION

The sale of goods is the most common of all commercial contracts. The law relating to it is
contained in the Sale of Goods Act hereunder referred to as SOGA. The contract of sale of
goods is subject to the general legal principles applicable to all contracts, such as offer and
its acceptance, the capacity of parties, free and voluntary consent, consideration and legality
of the object.

The Sale of Goods Act1 as the law which governs the sale of goods contracts has laid down
certain terms which intend to protect a party to the contract as well as rules of general
application where the parties fail to provide for contingencies which may interrupt the
smooth performance of the contract2.
Generally, at the time of sale, the seller makes some representation, statements of
stipulations for the praise of his goods. Some of representations are in nature of opinion
others are in nature of facts. Representation as to fact which becomes a part of contract of
sale is called as stipulation.

Stipulation may be condition or warranty depends upon its importance in relation to

contract.

Stipulation which is essential to the main purpose of contract is known as condition.

Breach of condition gives the aggrieved party right to terminate the contract.

Stipulation which is collateral to the main purpose of the contract is warranty. Breach
of warranty gives rise to the aggrieved party right to claim damages but contract cannot
be terminated.

The conditions and warranties may be express or implied.

1
[Cap 214 R.E 2002]
2
www.lawteacher.net

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Express conditions and warranties are those, which the parties agree expressly, i.e.
orally or in writing.

Implied conditions are those, which are implied by the law in the absence of any
agreement to the contrary.

OBJECTIVES

1. To know about the Sale of Goods Act, 1930.

2. To understand the concept of instalment deliveries of goods under sale of goods.

RESEARCH METHODOLOGY
The researcher has adopted the doctrinal method of the research.

SOURCES OF DATA
In order to complete the research study, the researcher will collect the material through
various primary and secondary sources of data.

PRIMARY SOURCES such as books, documents, and legislations.

SECONDARY SOURCES reviewing the internet and different websites which preserve
documents and put them up for knowledge distribution.

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LIMITATION OF THE STUDY

Since the researcher is a student of law, she has access to a limited area and knowledge. The
researcher having only a preliminary knowledge of the subject could understand the problem
clearly but was faced with constraints.

However, the researcher only has access to limited amount of work that is available in the
library. The researcher has a restricted access to information and sources for reasons beyond
her control. But the researcher will still attempt to take out the best possible work.

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 1. IMPLIED CONDITIONS AND WARRANTIES

The Indian Sale of Goods Act 19303 is a Mercantile Law, meaning thereby it governs a
multitude of commercial transactions that take place in the country. A contract of sale of
goods is a contract whereby the seller transfers or agrees to transfer the property in goods to
the buyer for a price. Apart from certain technicalities pertaining to “Sale” and “Agreement
to Sell”, Sale of goods is a contract and so it must follow the Indian Contract Act 1872.

The Sale of Goods Act 1930 (hereinafter the Act) contains various provisions regarding the
sale of goods. One such provision is of conditions and warranties. In Section 12 of the Act
the meaning of conditions and warranties are given as under-

(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.

But our concern here is with 'Implied Conditions and Warranties'. If a stipulation forms the
very basis of the contract, or, as stated in S.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, it is called warranty S. 12(3)4.

3
[Cap 214 R.E 2002]
4
Ibid

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Parties might expressly give any conditions or warranties in their contract. For e.g. for a
procurement of red dress, to be worn by a girl at a perform on a
selected day, it'sspecific condition that it ought to be red dress for a selected day and
may reach on time. However is there the other condition?

Affirmative,there is different conditions conjointly that aren't solely aforementioned by

parties however area unit impliedly understood. within the aforementioned illustration,
the tacit condition is of an ideal dress, to not be torn, matching with elite piece etc. Let's have
a deep inspect this provision5.

Meaning–Apart from what may be provided by the parties in the contract, certain conditions
and warranties as provided under S.14 to 17 are impliedly there in every contract of sale of
goods. Thus the stipulation that are implied in a contract of sale of goods corresponding to
their nature of being a condition or warranty as according to the nature of contract is called as
Implied Conditions and Warranties. They are binding in every contract unless they are
inconsistent with any express condition and warranty agreed by the parties.

5
R.K Bangia, Contract-I.

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 2. IMPLIED CONDITIONS

Those conditions are not included in the contract but the law presumes their existence in the
contract are called implied conditions. Following conditions are included by law in to a
contract of sale of goods.

1. Right To Sell6 :-
This right is considered as an implied conditions in every sale contract. It is presumed that
he can sell the goods and he can enter in sale agreement.

2. Sale By Description :-
In this case implied condition is that goods shall the correspond with the description. A
buyer can reject if the goods if these are not according the description.

3. Sale By Sample :-
In this case goods must be supplied according the sample agreed upon condition.
i. The buyer may be able to compare the sample with the bulk.
ii. The goods should be free from any defect.
iii. The bulk should match with the quality of the sample.

4. Sale By Sample and Description :-

In this case goods supplied must correspond with sample and description both. So there is
implied condition in it that if bulk does not match with one even then buyer may reject the
goods.

5. Condition of Merchantable Quality :-

Merchantable quality means that the goods must be sale able in the market as goods of that
description are sold. In case of any defect a seller must inform the buyer. It is implied
condition.

6
Section 12, Sales of Goods Act 1930.

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6. Conditions As Quality To Fitness :-
Sometimes buyer informs the seller that he wants to purchase the goods for particular
purpose. It is implied condition that goods shall serve the purpose of buyer. As the buyer
relays on the sellers skill then seller should provide the goods according the description.

7. Wholesomeness Condition :-
It means conductive to health. When someone makes a sale of contract about the eatable
goods this condition is applied. If someone supply the goods and it damages to health then
supplier will be liable for damages 7.
Example :- Sams Food Company supplied food on the marriage party of Mr. Vicky.
After eating the food people were infected and died. The company was held liable in
damages.

7
Avatar Singh, Law of Contracts.

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 3. IMPLIED WARRANTIES
1. Possession Of Goods :-
It is an implied warranty on the part of the seller that buyer shall enjoy the quiet possession of
goods sold to him without any disturbance. In case of any disturbance a buyer can claim the
damages from the seller.

2. Dangerous Nature Must Be Disclosed :-

It is necessary that seller should disclose the dangerous nature of the good sold to the buyer.
If he does not disclose then any type of loss suffered by the buyer will be compensated by the
seller.
Example :- Mr. Noor sold the camel to Mr. Naveed which is very dangerous. But he did not
told about the nature of the camel. The camel killed to Mr. Baqir son of Mr. Naveed due to
the ignorance of the nature of camel Mr. Noor will be liable to compensate Mr. Naveed.

3. Burden on Property :-
Before selling the goods, it is necessary that these should be free from any charge or
encumbrance from any third party. If a sellers does not tell about such burden on the goods to
the buyer and later on the buyer suffers a loss. The buyer can claim such damages from
seller.
Example :- Mr. Khaliq the owner of a horse, pledges it with Mr. Karim. After a month, Mr.
Khaliq obtains possession of the horse from Mr. Karim for some purpose and sells it to the
Mr. Jawad. Mr. Karim goes to Jwad and tells him the pledge story. Mr. Jawad has to make
the payment of pledged amount to Mr. Karim. In this case of breach of warranty and Mr.
Jawad is entitled to claim compensation from Mr. Khaliq.

3.1 DIFFERENCE BETWEEN CONDITIONS AND WARRANTY

1. Difference 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.

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2. Difference 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.

3. 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.

4. Link With Contract :-

Condition : A condition has a direct link with the essential part of the contract.
Warranty : A warranty has no direct link with the essential part of the contract.
Define the sales of goods act and discuss the essential characteristics of a contract of sales of
goods.

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 4. JUDICIAL INTERPRETATIONS AND EFECTS

In Rowland v Divall8, the claimant, a dealer bought a automotive from the suspect for £334.
He painted the automotive and place it in his salesroom and sold-out it to a client for
£400. 2 months later the automotive was impounded by the police because it had
been taken. it absolutely wasthen came to the initial owner. Each the applier and suspect were
unaware that the automotive had been taken. The applier came the £400 to the client and
brought a claim against the suspect underneath the Sale of Goods Act. It absolutely was
held that the suspect didn't have the proper to sell the products as he didn't get good title from
the felon. Possession remained with the initial owner. The suspect had a pair of months use of
the automotive that he didn't must get and therefore the applier wasn't entitled to any
compensation for the work distributed on the automotive.

If the goods bears labels infringing the trademark of a third party, the seller has no rights to
sell them. In Niblett v Confectioners' Material9, the claimant purchased 1,000 tins of
condensed milk from the defendant. The tins were labeled 'Nissly'. Nestle told the applier that
if they tried to sell these on, they might apply for AN injunction to stop the sale because
the label was terribly just like Nestle's labels for his or her milk. The claimants in
agreement to not sell them and brought an action against the sellers. it absolutely
was control that ,the sellers didn'thave the proper to sell the products and
thus the consumers were entitled to repudiate the contract.

In Butterworth v Kingsway Motors10, R was in possession of a automobile under a hire-

purchase contract with a finance company. Before exercising the choice to purchase,
R sold the automobile to X, who then sold it to Y. Y sold the automobile to km,
and KM sold it to B. The finance company recovered the automobile from B. it had
been held that at the time KM presupposed to sell, they weren't the owners of the automobile.
B was entitled to recover the entire of the acquisition worth paid to KM, as a result of there

8
(1923)2 KB 500
9
(1921) 3 KB 387 Court of Appeal
10
(1954) 1 WLR 1286

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was adcomplete failure_of consideration. So itfhadhbeen discovered that wherever a merchan
t having no title to the goods at the time of the sale, later on acquires a title,that title feeds the,
that title feeds the defective titles of each the initial buyer and the subsequent buyer.

2.Implied Condition in sale by description – S. 15– When the goods are sold by description
there is an implied condition that the goods supplied shall correspond with the description.
Lord Blackburn inBowes v Shand11stated: If you contract to sell peas, you cannot oblige to
take beans.

In Shepherd v Kane12, A ship was contracted to be sold as "copper fastened vessel" to be

taken with all faults, without any allowance for any defects whatsoever. The ship turned to be
partially Copper fastened.The court held that that the buyer was entitled to reject the goods.

When a descriptive word or phrase is employed Associate in Nursing exceedinglyin a very

contract of sale to explain the merchandise it creates an understood condition that the
products can correspond to the outline. as an example an acquisition of seedless Grapes,
signifies that the fruit can haven't any seeds. If it turns that the fruit is with seeds the
customer will reject the products.

3.Implied condition in sale by sample as well as description – S. 15- When the goods are sold
by sample as well as description, it is not sufficient that the bulk of goods correspond with the
sample if the goods do not correspond with the description.

In Wallis v Pratt13, there was a contract purchasable of seeds cited as 'Common English
Sainfoin'. However, the seeds equipped to the customer were of a distinct quality. The
defect conjointly existed within the sample. The discrepancy in quality was
discovered solely once the seeds were planted. The customer may recover damages as there
was a breach of condition.

11
(1877) 2 App Case 455
12
(1821)5b&Ald.240
13
(1910) 2 KB 1003

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Before heading towards the additional tacit conditions allow us
to fathom the belief of precept that means 'Buyer beware'. This belief of precept relies on the
basic principle that when a buyer is happy with the products quality,
then he has no succeeding right to reject such product. This belief is enshrined through
Section 16 of the Act, thereforeit becomes necessary to check it.
Sometimes the products purchased by the customer might not suit the actual purpose that the
customer needs them. The question in such case arise is, whether or not the
customer will reject the products or he's alleged to take the danger of products bobbing
up not appropriate for thegspecified purpose.

The section provides that as a general rule, there's no tacit pledge or condition on the
standard or fitness for any specific purpose of products equipped below a contract of
sale. it's incorporation of the rule contained in maxim precept which implies emptor watch
out. in line with this rule, the customer himself ought to use caution whereasgetting the
products and he ought to himself ascertain that the products suit his purpose; however if the
products ar after found to be unsuitable for the aim of the customer, he cannot
blame marketer for the identical.

For e.g. A purchases a horse from B. A needs the horse for riding but he doesn't mention this
to B. The horse is not suitable for riding but only for carriage. A can neither reject the horse
nor can he claim any compensation.

In Re Andrew Yule & Co.14, the buyer ordered for hessianclothe without specifying purpose
for which he wanted the same. It was in fact needed for packing. Because of its unusual
smell, it was unsuitable for the same. It was held that the buyer had no right to reject the cloth
and claim damages.

Section 16 of the act incorporates certain exceptions to the rule of caveat emptor which are
the next two implied conditions of a contract of sale also.

14
AIR 1932 Cal 879

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4.Implied condition as to quality or fitness – S. 16(1) {First exception to caveat emptor}-
Where the buyer, expressly or by implication, makes known to the seller the particular
purpose for which the goods are required, so as to show that the buyer relies on the seller's
skill or judgment, and the goods are of a description which it is in the course of the seller's
business to supply (whether he is the manufacturer or producer or not), there is an implied
condition that the goods shall be reasonably fit for such purpose.

In Priest v Last15, B went to S, a chemist and demanded a hot water bottle from him, S gave a
bottle to him telling that it had been meant for hot water, however not boiling
water. After few days while using the bottle B's spouse got injured because the bottle burst
out, it had been found that the bottle wasn't acceptable be used as hot water bottle. The
court controlthat the buyer's purpose was clear once he demanded a bottle of
hot bottle, so the tacit condition on fitness isn't met during this case.

In Frost v Aylesbury Dairy Co.16, the claimant bought milk from the defendant and the
account book supplied to him contained statements on the precautions taken to keep the milk
free from germs. The claimant's wife died of typhoid fever contracted from milk supplied by
the defendants. It was held that the claimant should be awarded.

5.Implied condition of merchantable quality – S. 16(2) {Second exception to caveat emptor}-

S. 16 (2) contains another implied condition which is by way of exception to the rule of
caveat emptor. It has been noted before in S.15 that when the goods are bought by
description, there is an implied condition that the goods supplied shall answer the description.
Goods supplied shall be of merchantable quality where –
-the goods are bought by description;
-from a seller who deals in the goods of that description (whether he is the manufacturer or
producer or not), there is an implied condition that the goods shall be of merchantable
quality.

15
(1903)2K.B.148
16
(1905)1 KB 608

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In Grant v Australian Knitting Mills 17 Dr Grant purchased 2 pairs of
woollen underclothing and 2 singlets from John Martin & Co. There was nothing to
mention the underclothing ought to be washed before wearing and Dr Grant failed to do thus.
He suffered a skin irritation inside nine hours of 1st sporting them. It was held that because
of such a defect the underwears were not of marketable quality.

In Shivallingappa v. Balakrishna& Son18,the buyer ordered for the best quality of 'toor dal'.
The dal was loaded in rain and by the time it reached the destination, it became damages
by wetness. it had been held that since the damaged toor dal couldn't be sold as `that
of highest quality because it was not of marketable quality. The customer was entitled to
claim damages.

Proviso to S.16(2) – Condition negative when the goods examined by the buyer:
Thus the proviso divides defect in two types-
Patent – Patent defects are those that can be found on examination by an ordinary prudence
with the exercise of due care and attention.
Latent – In latent defects, the implied condition of merchantability continues in spite of the
examination of the goods by the buyer.

17
(1933) 50 CLR 387
18
AIR 1962 Madras 426

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 5. CONCUSION

The Indian Sale of Goods Act, 1930 is a Mercantile Law, which came into existence on 1
July 1930[1][2], during the British Raj, borrowing heavily from the Sale of Goods Act 1893 It
provisions for the setting up of contracts where the seller transfers or agrees to transfer the
title (ownership) in the goods to the buyer for consideration. It is applicable all over India,
except Jammu and Kashmir. Under the act, goods sold from owner to buyer must be sold for
a certain price and at a given period of time. The act was amended on 23 September 1963,
and was renamed to the Sale of Goods Act, 1930. It is still in force in India, after being
amended 1963 and in Bangladesh as the Sale of Goods Act, 1930.

As regards conditions and warranties, Section 16(4) lays down that an express warranty or
condition does not negative a warranty or condition implied by this Act unless inconsistent
therewith. That means that when the parties expressly agree to such stipulation and the same
are inconsistent with the implied conditions and warranties, the express conditions and
warranties will prevail and the implied ones in S. 14 to 17 will be negative.

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 BIBLIOGRAPHY

BOOKS REFERRED

 R.K Bangia, Contracts-II

 Lawman, Sale of Goods Act, 1930

 Universal, Indian Contract Act,1972( Bare Act)

 Avatar Singh, Law of Contracts

WEBSITE REFFERED

 www.indiankannon.com
 www.legalservice.com
 www.wikipedia.org
 www.google.com
 www.ipleaders.com
 www.Toppr.com
 www.lawteacher.net
 www.legacrystal.com

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