IMPLIED CONDITIONS AND WARRANTIES: JUDICIAL

INTERPRETATION

INTERNAL EVALUATION FOR CONTRACT-II

SUBMITTED BY:
TANMAY RAJ ANAND
17B163
SUBMITTED TO:
MS. NIYATI PANDEY
 IMPLIED CONDITIONS AND WARRANTIES: JUDICIAL
INTERPRETATION
The Indian Sale of Goods Act 1930 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).

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's
specific 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 provision.

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.

 Implied Conditions:
There are seven implied conditions in a contract of sale of goods. They are –

1. Implied condition as to title – S. 14(a)– In every contract of sale, unless the circumstances
are such as to show a different intention, there is an implied condition on the part of the
seller that in case of sale, he has a right to sell the goods and in the case of agreement to sell,
he will have the right to sell goods at the time when property in them is to pass.

In Rowland v Divall [i], 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 was then 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' Material [ii], 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't have the proper to sell the products and
thus the consumers were entitled to repudiate the contract.

In Butterworth v Kingsway Motors [iii], 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
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 in Bowes v Shand [iv] stated: If you contract to sell peas, you cannot oblige
to take beans.

In Shepherd v Kane [v], 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 exceedingly in 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 Pratt[ix], 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.

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, therefore it 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. [x], the buyer ordered for hessian clothe 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.

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 Last [xi], 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 control that 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 [xii], 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.

In Grant v Australian Knitting Mills [xiii] 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 & Son [xiv], 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.

 Liability of all natural consequences:

In Jackson v Watson [xv], the plaintiff purchased a tin of salmon from defendant. The
contents of the tin being poisonous, his wife died. It was held the defendant were liable to pay
damages.
Hence, the basic concept of caveat emptor is contained in the section 16 of the Act.

6. Conditions implied by trade usage - S. 16(3)- Sub-Section (3) of Section 16 give statutory
force to conditions implied by the usage of a particular trade:
An implied warranty or condition as to the quality or fitness for the particular purpose may
be annexed by the usage of trade.
In case of Peter Darlington Partners Ltd v Gosho Co Ltd [xvi], where a contract for the sale
of canary seed was held subject to the custom of the trade that for impurities in the seed, the
buyer would get a rebate on the price, but would not reject the goods.

7. Implied condition in a sale by sample – S. 17– According to S. 17 (1) - A contract of sale

is a contract for sale by sample where there is a term in the contract, express or implied, to
that effect. The purpose of a sample is to present to the eyes the real meaning and intention of
the parties with regard to the subject matter of the contract which owing to the imperfection
of language, it may be difficult or impossible to express in words. According to S. 17 (2)- In
the case of a contract for sale by sample there is an implied condition-
(a) that the bulk shall correspond with the sample in quality;
(b) that the buyer shall have a reasonable opportunity of comparing the bulk with the sample;
(c) that the goods shall be free from any defect, rendering them un-merchantable, which
would not be apparent on reasonable examination of the sample.

In Godley v Perry [xvii], a retailer purchased from a distributor variety of toy catapults in an
exceedingly sale by sample. The retailer sold-out one amongst those catapults to a boy
and once the boy tried to play with it, it bust into items due to producing defect.
The retailer was held guaranteed to pay compensation to the boy and in his turn he sued
the distributor for indemnity. It had been found that the retailer had done cheap examination
on his half, therefore distributor had to indemnify him.

Implied Warranties:
1. Implied warranty of quiet possession –
S. 14 (b)- In a contract of sale unless the circumstances of the case show different intention,
there is an implied warranty that the buyer shall have and enjoy possession of goods.

2. Implied warranty against encumbrances- S. 14(c)-

There is an implied warranty that the goods sold shall be free from any charge or
encumbrances in favor of any third party.
If there's a charge or encumbrance on the goods sold and also
the purchaser should discharge the same, he's entitled to get compensation for the
same from the vendor. If the charge or encumbrance of the goods is thought to the
customer at the time of the contract of sale, he becomes bound by the same and doesn't have
any right to claim compensation for discharging the same.

 Exclusion of implied terms and conditions- S. 62

Exclusion of implied terms and conditions- Where any right, duty or liability would arise
under a contract of sale by implication of law, it may be negatived or varied by express
agreement or by the course of dealing between the parties, or by usage, if the usage is such
as to bind both parties to the contract.
  Conclusion:
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.
  End notes-
[i](1923)2 KB 500
[ii](1921) 3 KB 387 Court of Appeal
[iii](1954) 1 WLR 1286
[iv](1877) 2 App Case 455
[v](1821)5b&Ald.240
[vi](1900) QB 513
[vii](1947)177 LT189
[viii](1921 )2 KB 519
[ix](1910) 2 KB 1003
[x]AIR 1932 Cal 879
[xi](1903)2K.B.148
[xii](1905)1 KB 608
[xiii](1933) 50 CLR 387
[xiv]AIR 1962 Madras 426
[xv]1909
[xvi](1964) 1 Lloyd's Rep. 149
[xvii](1960)1 WLR 9

Books Referred –
1. Avtar Singh, Law of Contracts, 12th 2017, Eastern Book Company
2. R K Bangia, Contract – II, 2019, Allahabad Law Agency