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Conditions & Warranties

Doctrine of Caveat Emptor

A CONDITION has been defined as a


stipulation essential to the main purpose of
the contract ;
the breach of which gives rise to a right to
treat the contract as having been repudiated.
A WARRANTY has been defined as a
stipulation collateral to the main purpose of
the contract ;
The breach of which gives rise to a claim for
damages but to a right to reject the goods
and treat the contract as having been
repudiated.

Ram consults Sham, a motorcar dealer for a


car suitable for touring purposes to promote
the sale of his product. Sham suggests
Toyota Qualis and Sham accordingly buys it
from Sham.The car turns out to be unfit for
touring purposes. Here the term that the
car should be suitable for touring
purposes, is a CONDITION of the contract. It
is so vital that the non-fulfillment defeats
the very purpose for which Ram purchased
the car.
Ram is entitled to reject the car and have
refund of the price.

Lets assume Ram buys a new Qualis from the


show room and it comes with a guarantee
against any manufacturing defect under
normal usage for a period of one year from
the date of original purchase and in the event
of any manufacturing defect there is a
warranty for replacement of defective part of
it if it cannot be properly repaired.
If after six months Ram finds that the horn of
the car is not working , he cannot terminate
the contract ; BUT
Get it either repaired or replaced from the
Company
Here Ram gets a right to claim for damages, if
any, BUT NOT the right of repudiation.

Whether a stipulation is a
CONDITION or a WARRANTY
depends, in each case, on the
CONSTRUCTION OF CONTRACT.
A stipulation, though described in
the contract as WARRANTY, may
be nonetheless by a CONDITION.

Condition v.Warranty
1. A CONDITION is a stipulation essential to the
main purpose of the contract ; whereas
A WARRANTY is a stipulation which is collateral
to the main purpose.
2. Breach of a CONDITION gives the right to the
aggrieved party to repudiate the contract ; but
In case of breach of a WARRANTY, the
aggrieved party can claim damages only.
3. A breach of CONDITION may be treated as a
breach of WARRANTY and hence no repudiation
of contract BUT breach of WARRANTY cannot
be treated as a breach of CONDITION.

Express and Implied CONDITIONS &


WARRANTIES : (Sec.14-17)
Conditions and Warranties may be
either
1. Express, or
2. Implied .
They are express, when the terms of
the contract expressly state them.
And implied, when, not being
expressly provided for. The law
implies them in any particular
contract on operation of its own rules.

Implied Conditions
Condition as to title :[Sec.14(a)]
An implied condition that the seller has
the right to sell the goods in the case of
sale and will have the right of sale in
the case of an agreement to sell them
at a time when the property is to pass.
Should the title be defective, the buyer
is entitled to reject the goods and claim
damages.

Sale by description
(sec.15)
Here the implied condition is that the
goods shall correspond with the
description, and if the sale is by sample
as well as by description, the goods must
not only correspond with the sample but
also with the description.
It is a condition which goes to the root of
the contract and the breach of it, entitles
the buyer to reject the goods whether the
buyer is able to inspect them or not.

Condition as to quality of
fitness
Sec. 16 of the Act provides that there is
no implied condition or warranty as to
the quality or fitness of the goods sold
for any particular purpose.
This is the fundamental principle of the
law of sales of goods, The Caveat
Emptor, i.e., let the buyer beware.

Caveat Emptor
Means let the buyer beware.
It is no part of the sellers duty in contract
of sale of goods to give the buyer an article
suitable for a particular purpose ; or
Of a particular quality ; unless
Such quality or fitness is made an express
term of the contract.
The person who buys goods must keep his
eyes open, his mind active, and should be
cautious while buying the goods.

If he makes a bad choice, he must suffer the


consequences of lack of skill and judgment in
the absence of any misrepresentation or
guarantee by the seller.
The general rule of the common law in regard
to quality or fitness under a contract of sale is
that except in cases of fraud, the buyer
purchases at his own risk relying upon his own
skill and judgment unless there has been a
condition or warranty.
This is expressed by the maxim caveat
emptor, which means, the buyer must take
care and if the buyer distrusts his own
judgment or skill, he may require seller to give
a warranty.

Exceptions to the
doctrine of Caveat
Emptor

There are certain circumstances, where this


maxim has no application. They are as follows :
1. If the seller has made a false representation
relating to the goods and the buyer has relied
upon it to his detriment ;
2. When the seller has deliberately concealed a
defect which is not apparent on the reasonable
examination of the goods ;
3. When the seller is a manufacturer or a dealer
of the type of goods, sold by him and the buyer
has communicated to him the purpose for
which it is

Required and relied upon the skill and


judgment of the seller, there is an implied
condition that the goods are reasonably fit
for the purpose for which they are required .
The exception, does not apply if the goods
are bought under the patent or trade
name ;
4. If goods are bought by description, then
there is an implied condition that the goods
shall be of merchantable quality,
[Sec.16(2)]
5. When goods are bought by sample then
they should correspond with the sample and
the buyer must have reasonable
opportunity of inspecting the goods ; and

6. If trade usage attached an implied


warranty or a condition as regards
quality of goods.
Quality of goods includes their state
or condition.[Sec.2(12)]

Conditions implied in case of


Sale by sample (Sec.17)
The bulk shall correspond with the sample as
regards quality
The buyer shall have reasonable opportunity
of comparing the bulk with the sample
The goods shall be free from any defect
which render them unmerchantable; and
which would not be apparent on a
reasonable examination of sample
In the case of sale by sample as well as by
description, the goods must correspond both
with the sample & the description

Conditions as to
Wholesomeness
In the case of eatables and
provisions, in addition to the
implied condition as to
merchantability, there is another
implied condition that the goods
shall be wholesome

Implied Warranties
(a) Warranty as to undisturbed possession
An implied warranty that the buyer shall
have and enjoy quiet possession of the
goods.
The buyer, having got the possession of
the goods, is later on disturbed in his
possession, he is entitled to sue the
seller for the breach of the warranty,
unless the circumstances of the contract
show a different intention.

(b) Warranty as to non-existence of


encumbrances
An implied warranty that the goods shall be free
from any charge or encumbrance in favor of any
third party not declared or known to the buyer
before or at the time the contract is entered into.

(c) Disclosure of Dangerous Nature of


Goods
There is another implied warranty on the
part of the seller that in case the goods are
inherently dangerous or they are likely to be
dangerous to the buyer & the buyer is
ignorant of the danger, the seller must warn
the buyer of the probable danger.
If there is a breach of this warranty, the
seller will be liable in damages.

Summary:
While entering into a contract of sale,
certain stipulations are put by both the
parties, such as
time for payment of price,
time for delivery,
quality of goods,
transfer of title, etc. these stipulations with
reference to goods may be conditions or
warranties depending upon the
construction of the contract.
A stipulation essential to the main purpose
of the contract is a condition whereas
collateral stipulations are called warranties.

Breach of a condition, and that of a


warranty, have different consequences.
Every contract of sales, have certain
conditions and warranties, implied by law.
Besides, the party may provide for
conditions and warranties by an express
agreement.
Regarding implied condition or warranty as to
the quality of fitness for any particular
purpose of goods supplied, the rule is Let
the Buyer Beware, i.e., the seller is under no
duty to reveal unflattering truths about the
goods, but this rule has certain exceptions.