295

CHAPTER: SEVEN
IMPLIED CONDITIONS AND WARRANTIES: AND
EXEMPTION CLAUSES IN THE AGREEMENTS OF
SALES OF GOODS

This chapter deals with the aspect of "Implied conditions

and warranties" and the question of their exclusion. The subject
matter of this part of the chapter will be discussed under the
following heads.

A. Implied conditions and warranties.

B. Exclusion of implied stipulations and Exemption clauses in
the Agreements of Sale of Goods. a

A Implied Undertaking Seller's Title:

(1) Implied undertaking regarding Seller's Title:

Section 14(a) of the [Indian] Sale of Goods Act provides:

"There is an implied condition on the part of

the seller that, in the case of a sale, he
has a right to sell the goods and that, in
the caspr,of an agreement to sell, he will
' have a right to sell the goods at a time when
the property is to pass."

From the above it can be stated that the seller has a right
to sell when he has a good tit-le to the goods. This means that
the goods are not stolen or they are not in the seller's
possession merely as a hirer under the hire-purchase agreement
and that the seller himself has a good title which he will be
able to transfer to the buyer. Apart from a good title, it also
 296

means that there is nothing else which prevents the seller from
selling the goods, for instance, the goods do not bear labels
infringing the trade ma'rk of somebody else.

If for the seller's want of title the buyer suffers some

loss, the seller is bound to compensate him for the same. If the
goods happen to be stolen property and the buyer has to restore
them to the true owner, and, therefore, he is not able to return
the same to the seller, he is still entitled to claim back the
price which he has paid to the seller, because when the buyer is
deprived of the goods on account of the seller's want of title,
there is total failure of consideration, for which the seller
should be held liable. In Powland v. Divall1, there was sale of a
P

car to a car dealer, who further sold the same after two months
to a customer. The car was a stolen one and the customer had to
surrender the same to the true owner. The car dealer refunded the
price to the customer and in his own turn brought an action
against his seller to recover back the price, although he was no
more in a position to return the car. It was held that the car
dealer was entitled to claim back the price because he did not
get what he had paid for, namely, a car to which he would have a
good title, there being thus a total failure of consideration.

In Niblett v. Confectioners' Materials Co. Ltd, the seller

was held to be having.no right to sell his own goods, which were
bearing labels infringing the trade mark of third person. In this
case, the plaintiffs purchased a quantity of tins of condensed

1 . (1 923) 2 KB 500.

2. (1 949) 2 KB 545.
 297

milk from the defendants. The goods were shipped from New York to
London. But on arrival they were seized by the custom authorities
on a complaint by third parties that the goods were bearing the
labels "Nissly brand", which infringed the trade mark of. the
third parties. The goods were released only when the labels were
removed The plaintiffs had to sell the un-labeled tins, which
resulted a loss to them'. The 'loss had occurred due to the fact
that the sellers did not have a right to sell the goods as they
had been sent. They were held liable for the loss suffered by the

plaintiff.

There is also an implied warranty contained in Section 14(b)

of the Act. This lays down that the buyer shall have and enjoy
quiet * possession of the goods. The buyer's possession is
generally disturbed when the seller makes a breach of the
condition as to title. If the seller sells goods which he does
not have a right to sell either for want of title or otherwise,
the buyer's possession gets affected thereby. For example, if
the type-writer sold is a stolen one and the buyer has to
surrender the same to^t'he ‘true 'owner, he cari ''hiake the seller

liable "for the loss. In such a case he can make the seller
liable for the consequential loss which arises directly and
naturally due to the breach of such warranty. Thus, if the buyer
had spent some amount on the overhauling of the type writer
purchased by him and then the same was surrendered, the buyer
could recover from the seller the price paid by him as well as
the overhauling charges. Similarly, if the car sold is
illegally imported and the buyer has to pay customs duty on the

3. Mason v. Burmingham, (1921) 3 KB 387.

 298

same,4 or there is litigation in respect of the goods purchased

because of their defective title,5 the buyer is entitled to

recover such sum from the seller.

In India, the provisions of Section 14 are identical to the

provisions contained in Section 12 of the (English) Sale of Goods
Act, 1893. The English Sale of Goods Act has undergone an
amendment. The important features of the amendment requires a
brief mention.

There is a possibility that when the seller has a limited

title in respect of the goods, this fact may be known to the
parties at the time of contract and the contract may be to
transfer to the buyer such a title only. In such a case there is
no implied condition as to the right to sell, but there are
implied warranties:

(i) that all encumbrances which the seller knows, have been
disclosed;
(ii) that the buyer's title shall not be disturbed either
by the seller, or any other person.5

The modification introduced into the law is justified on the

ground that when the buyer takes the goods knowing about the
limited title of the seller, he should not obviously expect

4. Stock v. Urey, (1941), QB 71.

5. Bowmaker (Commercial) v. Day (1 965) 2 All ER 856: (1 965)
AIR 1396.
6. Section 12, Sub-Secs.(3) to (5) , The English Sale of
Goods Act, 1979.
 299

anything more than that in the bargain. Subject to this limited

title which the buyer gets, his right to quiet possession has
been preserved by the law. It may be noted here that this
provision is simply reiteration of the rule that if any contract
is subject to certain terms which have been brought to the
knowledge of the buyer, the buyer is bound by those terms. In
other words, if a seller having a limited title in respect of
certain goods sells them with that fact brought to the knowledge
of the buyer, under such a contract the buyer cannot expect
anything more than what is being transferred to him. Since even
without this additional provision, which has been introduced into
the English law by amendment, the respective position of the
parties would be the same, there is no need of any amendment of
the Indian law in this respect.

(2). Implied Condition in Sale by Description:

According to Section 15, (Indian) Sale of Goods Act:

Where there is a contract for the sale of

goods by description, there is an implied
condition that the goods shall correspond
with the description; and if the sale is by
sample as well as by description, it is not
sufficient that the bulk of the goods
corresponds with the sample if the goods do
not also correspond with the description.

When the sale of goods is by description, the description

serves the purpose of identifying what exactly is to be supplied.
It is, therefore, expected that the seller shall supply the goods
of that description. "If you contract to sell peas, you cannot
 300

oblige a party to take beans" . " If the description of the

article tendered is different
i
in any respect, it is not the
article bargained for, and the other party is not bound to take
it."'*7 Description may be regarding are, 8
how old the goods
q in
their size and dimensions, the quantity in each package, the
1 *1
number of tins which each case should contain, the proportion
of different-kind of goods mixed together, the time when the
shipment is to arrive, or anything which identifies what
exactly is the subject matter of the contract.

The term 'sale of goods by description* must apply to all

cases where the purchaser has not seen the goods, but is relying
on the description alone.14 Even if the buyer has seen the goods
but is relying on the description of the same as given by the
seller, the sale of goods is by description.1^

7. Bowes v. ' Shand, (1 877) 2 AC 455 at 480, (Per Lord

Blackburn).
8. Varley v. Whipp, ( 1900) 1 QB 513.
9. . Arcos Ltd. v. E.A. Fonaasen and Son, (1933) AC 470.
10. Manbre Seccharine Co. v. Corn Products Co. (1919) 1 KB
1 98.

11 . Re Moore and Co. Ltd. v. Landauer and Co. (1919) 1 KB

198.

12. Antony Thomas v. Ayuppunnia Mani, A.I.R. 1960 Ker. 176 .

13. Mecpherson Train and Co. Ltd. v. Howard Ross and Co.
Ltd., (1955) 2 All . ER 445.

14. Verley v. Whipp, (1 900) 1 QB 513 at 516., (Per Channel,

J.)
15. Ibid.
 301

When the sale is by sample as well as description it is not

enough that the goods correspond to the sample. Such goods must
correspond to both sample as well as description, otherwise the
seller would be liable for the breach of condition. Thus if there
is sale by sample of seeds which are described as "English
sainfoin", and if the seeds which are supplied are of different
description known as "giant sainfoin: seeds, the seller would:be
liable . for the breach of the implied condition even though the
goods supplied correspond to the sample. When the sale is by
sample and description, even if the agreement spells out that the
goods are warranted only equal to samples, the seller would.be
liable if the goods do not correspond to the description. In
Nichol v. Godts,^ there was sale of "foreign refined rap^ oil"
warranted only equal to samples. The oil supplied though in
conformity with the sample, was adulterated with hemp oil, and
could not be commercially known as "foreign refined rape oil".
The seller was held liable for the breach of the implied
condition.

English law on this point .was identical to thg Indian one

but the same has been amended by the Supply of Goods (Implied
Terms) Act, 1973. By this amendment the scope of what constitutes
"sale by description" has been extended and there could be a sale
by description even of such goods which the buyer has seen and
selected. The relevant provision which is contained in Section
13(3) of the (English) Sale of Goods Act,1979 is as under:

16. Wallis v. Pratt, (1911) AC 394.

17. (1854) 1 0 Ex. 191 .
 302

A sale of goods is not prevented from being a

sale by description by reason only that,
being exposed for sale or hire, they are
selected by the buyer.

According to the above stated provision, even if the buyer

purchases the goods after having seen them, or even from ,a self-
»

service shop it may still be a sale by description. Thus, if a

person purchases a car after having seen the same and the car is
described as that of a 'particular model', or having run only a
certain mileage, or having certain other features, that would be
considered to be a sale by description. The object of this
• ‘i

provision is to keep the responsibility of the seller intact in

sale by description inspite of the fact that the buyer has seen
or selected the goods. «

The interest of the buyer in India also needsl to be

protected in this regard. It is submitted that a proviso be
appended to Section 15 of the (Indian) Sale of Goods Act, which
may read as under:

Provided that a sale of goods would not cease

to be a sale by description by the mere fact
that the goods are exposed for sale, or the
buyer has selected or examined the same.

(3). Implied Condition as to Quality or Fitness:

Section 16 of the Indian Act incorporates two implied

I

conditions: one as to the quality of fitness of the goods for a

particular purpose second, as to merchantable quality of the
goods. These implied conditions are aimed at protecting the
interest of the buyer from the application of the common law
principle of Caveat Emptor, which is incorporated in the opening
 303

words of Section 16. The general principle (Known as Caveat

Emptor) to which the. two implied conditions constitute an
exception, is set out in the opening words of Section 16, which
reads as under:

...there is no implied warranty or condition

as to the quality or fitness for any
particular purpose of the goods supplied
under and contract of sale.

The common law rule of Caveat Emptor, 'or buyer beware',

meaning thereby that the buyer himself was to watch his interest
while purchasing goods and there was no implied warranty or
condition as to the quality or fitness of the goods for any
particular purpose from the seller. The origin of the rule can
be found from the time when the markets were confined to ;small
geographical areas, there was not much trade or business•, and
invariably the seller and the buyer came in personal contact
while the transaction was made, the sale was generally only in
'market overt', the buyer having lot of opportunity and time
to examine the goods and ascertaining the suitability of the
goods to purpose which he has in view. . With the changing times
when the buyer made the purpose known to the seller, ^ or had.no
opportunity of examining the goods, and he purchased the goods by
on !
their description, w the courts construed the contracts as
implying terms as to the quality of the goods for a particular
purpose, or as to their merchantable quality.- The English Sale of

' ' ’ i
18. Morley v. Attenborough, (1849) 3. Hxch 500 at 511.
I '

19. Randall v. Newson, (1877) 2 QBD 102 (CA) .

20. Jones v. Just, (1 868) LR 3..QB 197.

 304 '

Goods Act, 1893, and also the Indian Sale of Goods Act, 1930
contained identical provisions in Sections 14 and 16,
I

respectively, incorporating the exceptions to the rule of Caveat

Emptor, which modified the rigour of the rule and granted
protection to the buyer.

An implied condition as to quality or fitness of the goods

for a particular purpose is contained in' the following exception
to the rule as incorporated in Section 16(1) of the Act:

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:
Provided that, in the case of a contract for
the sale of a specified article under its
patent or other trade name, there is no
implied condition as to its fitness for any
particular purpose.

When the buyer makes the particular purpose, for which the
goods are required, known to the seller, and he relies on the
seller's skill and judgment, then it becomes seller's duty to see
that the goods supplied are suitable for such purpose. When the
goods can be used for a number of purposes the particular purpose
which the buyer has in mind has to be expressly told to the
seller, whereas, when the goods can be used only for one purpose,
the purposes impliedly known to the seller, and the reliance on
 305

the seller's skill and judgment is also implied from the

circumstances of the case. The mere fact that the buyer goes to a
particular shop implies that he relies on the seller's skill and
judgement in having selected his stock with skill and confidence.
Regarding this aspect, in Grant v. Australian Knitting Nille,
71
Lord Wright observed as under:

It is clear that the reliance must be brought

home to the mind of the seller, expressly or
by implication. The reliance will seldom be
express: it will usually arise by implication
from the circumstances : thus to take a case
of a purchase from a retailer, the reliance
will in general be inferred from the fact
that a buyer goes to the shop in the •
confidence that the tradesman has selected
his stock with skill and judgment: the
retailer need know nothing about the procase
of manufacture: it is immaterial whether he
be manufacturer or not: the main inducement
to deal with a good retail shop is the
expectation that the tradesman will have
bought the right goods of a good make...

In Chaproniere v. Nason, ***• the buyer purchased a bun from a

bakery, and as he tried to bite it, his teeth struck on a; stone
in the bun as a consequence of which one of his teeth was broken
and an abscess formed in his jaw. It was held that bun was! meant
for eating, and due to the presence of stone in it, it was not
suitable for the required purpose. Moreover, the fact that the

21 . (1 936) AC 85 at 99.
22. (1905) 21 AC 633.
 306

buyer has preferred to purchase his bun from a particular bakery

was sufficient to show that he has relied on the seller s skill
and judgment. In Grant v. Australian Knitting Mills. Ltd., the
plaintiff purchased two underwear from a retailer. As the
underwears contained certain chemicals, the plaintiff contracted
dermatitis after wearing the same. Since the underwears were
meant only for one purpose, of being put next to skin, and they
were unsuitable for the purpose, the seller was held liable for
the same. Similarly, in Priest v. Last24 a hot water bottle was

defective and it burst and injured the buyer's wife while it was
being used in a normal way, the seller was held liable on account
of the goods being unsuitable for the only purpose forwich they
were deemed to have been purchased on the supposed reliance on
the seller's skill and judgement. In the same way if the milk
contained typhoid germs and the buyer's wife after having
consumed the same was infected by the disease which resulted in
her death, the seller could be made liable for the same. If a
wrist watch does not give satisfactory service inspite of
repeated repairs by the seller the same is deemed to be
unsuitable for the purpose for which it is normally purchased,
and the seller is bound to either replace the watch or refund the
price. ° When a tin of salmon is unfit for human consumption and
results in the death of the buyer's wife after consuming the
contents of that tin, the seller would be liable to the buyer for

23. (1936) AC 85.

24. (1903) 2 KB 148.

•25. Frost v. Aylesbury Dairy Co., (1905) 1 KB 608.

26. Raghava Menon v. Kuttappon Nair, A.I.R. 1962 Ker. 318.

 307

?7
the loss of wife's services.

When the goods are' generally fit for a particular purpose,

but do not suit a particular person because of some abnormality

with him, the seller cannot be held liable for the breach of this
implied condition. In Griffithas v. Peter Conway Ltd. - the
plaintiff bought a Harris Tweed Coat and contracted dermatitis
after using the same for sometime. It was found that there was
nothing wrong with the cloth which would have affected the skin
of the normal wearer, the dermatitis was caused in this case
because of abnormally sensitive skin of the buyer, Mrs.
Griffiths. The coat being '‘reasonably fit' for a normal wearer
the seller was held not liable for the breach of the condition.
It has, however, been held that the position would be different
if the coal is purchased for a "particular ship', and the seller
is expected to supply only such coal which is suitable for the
on
ship itself. Similarly, if herring meal is sold for compounding
into animal feeding stuffs, and the meal is contaminated with
some toxic element, and such meal is generally harmful to most
animals, but creates serious damage to mink, who are peculiarly

susceptible to the toxic element, the seller would be liable for

on
such a stuff. This case is different from the case of
Griffiths v. Peter Conway Ltd., in so far as the herring seal was
not only harmful to animals of peculiar susceptibility, but
harmful to most animals also.

27. Jackson v. Watson, (1909) KB 193.

28. (1939) 1 All. ER 685.

29. Manchester Liners v. Rea, (1922) 2 AC 74.

30. Ashington Piggeries- Case, (1 972) AC 441.

 308

In order that the buyer can avail of the above stated

implied condition he has to further establish that "the goods are

l

of a description which it is in the course of the seller's

business to supply".

(i) Sale under a patent or trade name:

... I

According to proviso to Section 16(1) of the Sale of Goods,

Act, 1930:

"In the case of. a contract for the sale of a

specified article under its patent or other
trade name, there is no implied condition as
to its fitness for any particular purpose." ,

A seller cannot be made liable when the buyer buys the goods

on the basis of a patent or other trade name. The presence of

this proviso could of great hardship to a buyer, who would

purchase various articles by mentioning the trade name.' The

effect of the implied condition would be negatived for him., The

courts have limited the scope of the proviso in such a way that
!

it could not play much mischief from the buyer's point of view.

The scope of the proviso has been limited in two ways. Firstly,
when the buyer though ordered goods by a "patent or other trade

name", was entitled to avail of the implied condition as to

fitness of the goods for a particular purpose, if he could show

that inspite of mentioning the trade name he has relied on the

seller's skill and judgment while purchasing the goods. In

31 . Chanter v. Hopking, 4 M and W 399.

 309

Bristol Tramways v. Fiat Motors Ltd.^^ there was sale of "Fiat"

buses which were known to be required for heavy passenger work in

I

Bristol. The buses having been found unsuitable for the purpose,
the seller was held liable. In Baldry v. Marshall,^ there was

sale of "Fiat" buses which were known to be required for heavy

passenger work in Bristol. The buses having been found
unsuitable for the purpose, the seller recommended their "Bugatti
car" for the purpose. The buyer then ordered for the "eight-
cylinder. Bugatti car", and the same was supplied. The car having
been found unfit, uncomfortable and unsuitable for touring
purposes, the buyer claimed to reject the car and recover back
its,price. It was held that in this case even though the car had
been purchased by mentioning the trade name, the buyer had, relied
on the skill and judgment of the seller while placing the order.
The car being unsuitable for the required purpose, the seller was
liable for the breach of implied condition.

The decision in the above cases virtually interpreted the

proviso out of existence, and the only situation where the
proviso operated was when the buyer did not rely on the skill and
judgment of the seller.

Secondly, even though when the goods were purchased by their

trade name and the implied condition as to the quality or fitness
for a particular purpose was not there, another implied
condition, contained in Section 16 (2) of the Sale of Goods Act,
i.e., the goods should be of merchantable quality could be

32. (1910) 2 KB 831 .

33. (1 925) 1 KB 260.

 310

invoked. The illustration for the same is provided by Wilson v.

Rickett Cockerell and Co. Ltd.34 In this case the plaintiff
I

ordered for a consignment of "Coalite" from the defendant. The

Colitis contained an explosive substance and when used in the
plaintiff's fireplace it blew up and caused danger to the room
and furniture. It was held that in view of the goods having been
purchased under a trade name, implied condition as to quality or
fitness could not be applicable, but the seller was, however,
liable as the coal was not of merchantable quality.

The English Sale of Goods Act, 1893, which contained

identical provisions to those of the Indian Sale of Goods Act,
has now been amended. After the amendment, Section 14 (3)* of the
English Act, 1979, contains provisions regarding implied
condition as to quality or fitness of the goods for a particular
purpose and reads as under:

Where the seller sells goods in the course of

a business and the buyer, expressly or by
implication, makes known-
a) to the seller, or
b) where the purchase price or part of it is
payable by installments and the goods were
previously sold by a credit broker to the
seller, to that credit broker, any
particular purpose for which the goods are
being bought, there is an implied
condition that the goods supplied under
the contract are reasonably fit for that
purpose, whether or not that is a purpose
for which such goods are commonly

34. (1954) 1 QB 598.

 supplied, except where the circumstances
show that the buyer does not rely, or that
it is unreasonable for him to rely, on the
skill or judgment of the seller or credit-
broker.

The amended sale of Goods Act in England makes certain new

provisions which are, in the following ways, different from the
provisions in India:

(1) According to the provision in the (Indian) Sale of Goods

Act, the implied condition as to quality or fitness for a
particular purpose is available when the goods sold "are of
a description which is in the course of seller's business to
supply', whereas according to the new provision under the
English Sale of Goods Act, the implied condition is
available whenever "the seller sells goods in the course of
a business." It means that in England now the implied
conditions available even though the goods sold are not such
which come within the category of goods sold in the course
of seller's business which he. is carrying on. Thus, it
would cover a case where a factory manufacturing cloth sells
its office typewriter, or a car or a car shop disposes of
the office furniture or the like.
(2) According to the existing provision in the Indian Sale of
Goods Act the buyer has to show that he has "made known to
the seller the particular purpose for which the goods are
required, so as to show that the buyer relied on the
seller's skill or judgment", whereas now under the English
Act the implied conditions available "whether or not that is
the purpose for which such goods are commonly supplied." The
 seller may however, avoid his liability by proving that
there are circumstances to show "that the buyer does not
i

rely, or that it is unreasonable for him to rely, on the

skill or judgment of the seller." Under the new provision in
England the burden of proof is put on the seller to show
that the buyer did not rely, or it was unreasonable for him
to rely on the seller's skill or judgment. This provision
confers greater protection on the buyer.
(3) Another important provision under the new English Sale of
Goods Act, 1979 is to repeal the proviso which excluded an
implied condition as to fitness for a particular purpose
when the goods were purchased under a patent or trade name.
The scope of this proviso had been limited because »inspite
of the fact that the goods were purchased under a trade
name, the implied condition as to merchantable quality was
not negatived thereby. The repeal of the provision under
English Law also confers a greater degree of protection
to the buyer and he can rely on the implied conditions as to
fitness of the goods even in those cases when he purchases
goods under a patent or trade name.

In view of the modern complexities of trade and numerous

diverse situations arising in the modern trade enabling the
seller to contract himself out of the implied condition as to
quality or fitness of the goods for a particular purpose, there
is an urgent need for the amendment of the (Indian) Sale of Goods
Act the lines of the (English) Sale of Goods Act, 1979. It is
submitted that Section 16, sub-Section (1) of the Act may be
amended on the following lines:
(1) The burden of proof should not be on the buyer to show that
he relied on theseller's skill or judgement. The fact that
the buyer purchases goods froma seller, who in the course
of a business sells them, should raise a presumption of an
undertaking from the seller that they are suitable for a
particular purpose. The seller should, however, be permitted
to rebut the presumption.

(2) For the availability of this implied condition it should not

be insisted that "the goods are of a description which it is
in the course of the seller's business to supply", as is
being done at present. It should be enough that "the seller
sells goods in the course of a business", as is the^present
position under English Law. By such an amendment the
interest of the buyer would be protected even in such
transactions where the seller sells the goods of a kind, the
sale of which is not his regular business.

(3) The provision to the sub-Section should be repealed,.Even if

the buyer purchases the goods under a patent or a trade
name, he has still a right to expect that they should be
having a certain quality or fitness for a particular
purpose. The seller should not be exonerated from his
responsibility in this regard. merely because of the fact
that the buyer purchases the goods under a patent or trade
name. Thus the amended sub-Section (1) to Section 16 would
read as under: Where the seller sells goods in the course of
a business and the buyer, expressly or by implication, makes
known to the seller the particular purpose for which the
goods are required, there is an implied condition that the
 314

goods supplied are reasonably fit for that purpose, whether

or not that is a purpose for which the goods are commonly
j

supplied, except where the circumstances show that the buyer

does not rely, or that it is unreasonable for him to rely,
on the skill or judgement of the seller.

(4). Implied Condition as to Merchantable Quality:

According to Section 16(2) of the Indian) Sale of Goods Act,

in a sale by description, there is another implied condition and
that is that the goods shall be of merchantable quality. The
provision is as under:

Where goods are bought by description from a

seller who deals in 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:
Provided that, if the buyer has examined the
goods, there shall be no implied condition as
regards defects which such examination ought
to have revealed.

According to the above stated provision: (i) In a sale of

goods by description; (ii) there is an implied condition that the
goods should be or merchantable quality; (iii) There is no such
implied condition if the buyer has examined the goods, as regards
such defects which such examination ought to have revealed.

The term 'merchantable quality' has not been defined in the

Act. It means that the article is of such quality and in such
condition that a reasonable man acting reasonably would after a
full examination accept it under the circumstances of the case in
 315

performance of his offer to buy that article, whether he buys for

his own use or to sell again.35 If underwear contain some
chemicals which cause skin disease,36 or motor horns are dented
and badly polished,3^ or a bottle of wine is so defective that
OO
it would break while being opened in the normal way, or the
OQ
grains have been damaged by rains, such goods are not of
merchantable quality.^6 The merchantable quality of the goods

does not merely mean the condition of the goods themselves but
also of the containers as well. Thus, if the tins contain labels
infringing the trade mark of a third person, ^ or the bottle is

defective and the same breaks or bursts and injures the buyer's
hands, ^ they are not of merchantable quality. In case the

goods, to the knowledge of the seller, are to undergo some

transit, it is necessary that the goods shall be able to with
stand such transit and should remain of merchantable quality for
the duration of transit and until they are normally to be

35. Bristol Tramways v. Fiat Motors Ltd., (1910) 2 KB 831 at

841, (Per Farwell, L.J.)

36. Grant v. Australian Knitting Mills, (1936) AC 85.

37. Jackson v. Rotax Motor and Cycle Co. (1910) 2 KB 937.

38. Morelli v. Fitch and Gibbons, (1928) 2 KB 636.

39. S.S. Mendse v. Balakrishna and Son, A.I.R. 1962 Mad. 426.

40. Grant v. Australian Knitting Mills. Ltd. (1936) AC 85.

41. Niblett v. Confectioners Materials Co., (1921) 3 KB 387.

42. Ceddling v. Marsh, (1 920) 1 KB 668; Morelli v. Fitch and
Gibbons, (1928) 2 KB 636.
 316

disposed off.43

As in India, the. term "merchantable quality" was also not

I

defined under the English Act, 1893. The term has now been
defined. The definition of the term as contained in the English
Act, 1979 runs as under:44

Goods of any kind are of merchantable

quality... if they are as fit for the purpose
or purposes for which goods of that kind are
commonly, bought as it is reasonable to expect
having regard to any description applied to
them, the price (if relevant) and all the
other relevant circumstances.

According to this definition the merchantable quality of the

goods is determined by taking into account the description
applied to such goods, their price, and other relevant
circumstances. The same goods may be deemed to be of merchantable
quality at a certain price, and not of merchantable quality at a
different price. Thus,

'Merchantable.....' is a composite quality

comprising elements of description, purpose,
condition and price. The relevant
significance of each of those elements will
vary from case to case according to the
nature of the goods in question and the
characteristics of the market which exists

43. Beer v. Walker, (1 877) LJ QB 677; Mash and Murrell v.

Emanuel, (1961), 1 All ER 485; Hardwick Game Farm v.
Suffolk Agricultural and Poultry Producers Association
Ltd., (1964) 2 Lloyd's Rep 227; Georgetown Seafoods Ltd.
v. Usen Fisheries, (1977) 78 DLR (3d) 542.
44. Section 14(6), The English Sale of Goods Act, 1979.
 317

for them. 4 JR

Earlier, English 'law as regards the implied condition as to

merchantable quality was similar to the Indian law. English law
has now been changed. The position as contained in Section 16(2)
of the Indian Sale of Goods Act, 1930 and the corresponding
English position as is now contained in Section 14(2) of the
English Act,1979 is discussed as under:

Section 16(2) of the Indian Act reads:

Where goods are bought by description from a

seller who deals in 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:

Provided that, if the buyer has examined the

goods, there shall be no implied condition as
regards defects which such examination ought
to have revealed.

Section 14(2) of the English Sale of Goods Act, 1979 is as

follows:

Where the seller sells goods in the course of

a business, there is an implied condition
that the goods supplied under the contract
are of merchantable quality, except that
there is no such condition:
a) as regards defects specifically drawn to
the buyer's attention before the contract

45. Cehave N.V. v. Bremer Handelgesellshaft, (1 975)' 3 All. ER

739 at 763 and 780 (Per Ormrod L.J.)
 318

is made; or
b) if the buyer examines the goods before
contract ip made, as regards defects which
that examination ought to reveal.

The points of difference between the existing English and

Indian position emerge as under :

(1) There is difference between the circumstances when the

implied condition as to merchantable quality is available.
(2) There is also difference as regards the circumstances when
such an implied condition may not be available.

(i) Circumstances when implied condition as to merchantable

quality is available:

It may be mentioned that so far as implied condition as

merchantable quality is concerned that is there according to the
Indian provision "Where goods are bought by description from a
seller who deals in goods of that description." On tjie other
hand, according to the English law such an implied condition is
there, "where the seller sells goods in the course of a
business". English law, as is apparent from the comparison from
the language of the two provisions, is different from the Indian
counter part in two ways: Firstly, in England implied condition
as merchantable quality can be there even if the sale is not by
description, whereas in India it is operative only if the sale of
goods is by description. English position in this regard is more
logical. Whether the sale is by description or not, seller
should supply goods of merchantable quality. It is unreasonable
that if the sale is not by description the seller is allowed to
 319

supply goods which are not of merchantable quality. The Indian

law needs to be changed in this regard.

Secondly, for this implied condition in England the seller

should sell goods "in the course of a business", whereas in India
the goods should be bought from a seller " who deals in the goods
of that description." According to the present English law it is
not necessary that the seller should have dealt with the sale of
such goods, or even for the sale of any goods, previously. It is
enough that it is a transaction of sale in the course of a
business. Indian law requires that the seller must be one who
deals in the goods of the description as the goods sold. English
law provides greater protection to the buyer, and such protection
is in every transaction of sale irrespective of the fact that the
seller is not the dealer in such goods. There is need for a
similar provision in India also.

(ii) Circumstances when implied condition as to merchantable

quality is not available:

According to proviso to Section 16(2) of the Indian Sale of Goods

Act:

.... If the buyer has examined the goods,

there shall be no. implied condition as
regards defects which such examination ought
to have revealed.

When the goods are supplied and the buyer examines them, the
seller's responsibility is over as regards such defects which
 320

such examination ought to have revealed. Thus, if the barrels of

glue are not of merchantable quality, but the buyer having an
l
opportunity to examine the same, does not discover the patent
defect therein, and takes the delivery, the seller cannot there
A /“

after be made responsible for the same. If the defect is a

latent one, for examples, when the skins of "fair average
quality" are supplied for leather goods, but the defect therein
cannot be discovered at the time of delivery while they are in a
dry salted state, and the same is discovered only when the goods
are subsequently put to the manufacturing process, the seller's
responsibility as regards such latent defects does not come to an
end merely because the buyer had examined the goods and then
taken their delivery.^

Before the amendment of the English law prior to 1973, the

law on the point was similar to that in India, but after the
amendment there is no such condition "if the buyer examines the
goods before the contract is made, as regards defects which that
examination ought to reveal."

Unlike provision under the Indian Law, the English provision

implies that if the buyer examines the goods after the contract
is made and inspite of a patent defect takes delivery of the
goods and does not raise any objection, the implied- condition as
to merchantable quality still continues. In other words, the law
of estoppel does not apply against a buyer who is negligent
himself in accepting the goods with a patent defect, which he
comes across after the making of the contract. This appears to

46. Thornett and Fehr v. Beers and Sons, (1919) 1 KB 486.

47. A.M. Khoyee and Co., v. Gorden, Woodroffe and Co., A.I.R.'
1937 Mad. 40.
 321

be a case of over-protection to the buyer by the English

legislature and undue responsibility of the seller in respect of
the goods examined b^ the buyer after making the contract as
regards defects which that examination ought to reveal. The
Indian law which enables the seller to exclude the liability when
the buyer has examined the goods whether before making the
contract or thereafter, appears to be more just, and that should
be retained as such.

The amended provision in England makes the exclusion of

implied condition as to merchantable quality possible, "as
regards defects specifically drawn to the buyer's attention
before the contract is made." The basis of the provisions that
when the defects are specifically drawn to the buyer's attention
before the making of the contract, the contract between the
parties is subject to those defects in the goods for which
attention of the seller was drawn. Certain condition of the
goods is a term of the contract, which is accepted by the buyer.
There was no need of this provision, because even without this
provision the rule that the parties to a contract are bound by
the terms thereof would apply. For instance, in Ward v. Hobbs,
when there was sale of pigs "with all faults", the seller was
held not liable for the consequences of the illness of the pigs,
which they had been suffering from at the time of sale.

It is submitted that Section 16 sub-section(2) should be

amended on the following lines:

(1) The implied condition as to merchantable quality should be

there in every contract of sale, irrespective of the fact

48. (1 878) 4 AC 13.

 322

that the goods are sold by description or not.

(2) The implied condition should be available when the seller
sells the goods "in the course of a business". There should
be no insistence that "the goods have been bought from a
seller who deals in the goods of that description", as at
present.

The amended sub-section (2) to Section 16 would read as

under:
Where the seller sells goods in the course of
a business, there is an implied condition
that the goods supplied are of merchantable
quality:
Provided that, if the buyer has examined the
goods, there shall be no implied condition as
regards defects which such examination ought
to have revealed.

(5). Implied Conditions in Sale by Sample:

Section 17(2) of the Sale of Goods Act, contains the

following series of implied conditions in a contract of sale by
sample: (i) That the bulk shall correspond with the sample in
quality; (ii) That the buyer shall have a reasonable opportunity
of comparing the bulk with the sample; and (iii) That the goods
shall be free from any defect, rendering them unmerchantable,
which would not be apparent on reasonable examination of the
sample.

An identical provision is also contained in Section. 15 (2) of

the English Sale of Goods Act, 1979.

The above stated provision is, therefore, quite reasonable

and takes due care of the seller's as well as the buyer's
interest.
 323

B: EXCLUSION OF IMPLIED STIPULATIONS AND EXEMPTION CLAUSES IN

THE AGREEMENTS OF I SALE OF GOODS:

With a view to provide protection to the buyer's interest, a

number of implied conditions and warranties have been
incorporated in the (Indian) Sale of Goods Act. It is not
uncommon to find that the seller may provide clauses in the
agreement excluding his liability in general or in respect of
particular conditions and warranties. For instance, in Ward v.
Hobbs50, the seller sold pigs with the stipulation that they were
being sold "with all faults". The pigs were suffering from
typhoid fever, and the disease was also conveyed to the other
healthy pigs of the buyer. The newly purchased pigs and the other
pigs, which were infected with the disease, died. Since the pigs
had been sold "with all faults", seller's responsibility for any
fault in the goods was thereby excluded, and he was hold not
liable for any loss to the buyer.

The seller, generally being in a better bargaining position,

is able to incorporate various exemption clauses in the
agreement. The problem has become more acute in view of the
increase in the volume of trade and business, and consequent
introduction of pre-drafted standard form agreements, which in
most of the cases the buyer has to, or sometimes is supposed to
have, entered into. Sections 16(4) and 62 of the Sale of Goods
Act, 1930 expressly permit the seller to exclude implied

49. Various implied conditions and warranties are contained

in Sections 14(a), 15,16,17, and the implied warranties
in Sections 14(b) and (c) , of the Sale of Goods Act,
respectively.

50. (1878) 4 AC 13.

 324

conditions and warranties, which have been incorporated in the

Act, or otherwise exclude his duty or liability that would arise
under a contract of sale. The provisions are as under:
Section 16(4). An express warranty or
condition does not negative a warranty or
condition implied by this Act unless
inconsistent therewith.
Section 62. 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.

The position in England as regards the implied conditions

and warranties and the possible exclusion thereof by the seller
was identical to the Indian one. Until recently, the seller in
England has an unfettered freedom to exclude various implied
terms in a contract of sale of goods. Section 55 of the English
Sale of Goods Act, 1893, which permitted such freedom, is as
under:

55. Exclusion of implied Terms. Where a

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 such usage as
binds both the parties to the contract.

51 . The freedom to exclude implied terms has been restricted

by the Supply of Goods (Implied Terms) Act, 1973, the
Unfair Contract Terms Act, 1 977 .and the English Sale of
Goods Act, 1979.
 325

The buyer's interest has been tried to be protected against

undue exclusion of implied terms through judicial interpretation,
and legislative provisions. The position in Kngland as brought
about by: (I) The Judicial attitude, and (1!) The Statutory
modifications is discussed hereunder.

(I) The Judicial Attitude:

The Courts have devised the following methods of

interpretation in order to disallow a seller from negativing his
liability through exemption clauses: (a)By requiring that there
should be no "Fundamental Breach of Contract", (b) By "Strict
Interpretation of the exemption clause".

(a) Fundamental Breach of Contract:

The court have insisted that so that an exemption clause is

valid it should not result in fundamental breach of contract. In

other words, when giving effect to the exemption clause would
negative the main contractual obligation, the exemption clause is
not to be given effect to. In Pinnock Brothers v. Lewis and Peat
CO
Ltd. there was a contract to supply 100 bags of copra cake,
with a wide exemption. Calsue saying the "the goods are not
warranted free from defect rendering the same unmerchantable,
which would not be apparent on reasonable examination, any
statute or rule of law to the contrary notwithstanding." The
goods contained considerable mixture of castor seeds and the same
made it poisonous resulting in illness of the cattle. It was held

52. (1 923) 1 KB 690.

 326

that the seller could not claim exemption on the. basis of

exemption clause because copre cake with that mixture could not
be called copra cake at all, and the supply of such goods had
resulted in the fundamental breach of contract for which the
seller was liable.

The kind, seriousness and combination of various faults in

an article might render the performance so defective that may
amount to fundamental breach of contract. In Yeoman Credit Ltd.
v. Appa^^, there was sale of a second hand car with a clause in
the agreement exempting the seller from any liability. The
brakes, clutches and steering of the car were in a hopeless
condition and the same was unworthy and unsafe, and when used it
covered a distance of about four miles in one and a half hours.
The cost of likely repairs of the care was $100. In view of the
condition of the car and the cumulative defects therein there was
held to be fundamental breach of contract, making the seller
liable to pay damages equal to the cost of repair of the car.

Another illustration to explain similar position is provided

by the case of Karsales (Harrow) Ltd. v. Wallis,^ concerning a
hire-purchase agreement. There was transfer of a second hand
Buick car on hire-purchase basis with the stipulation that "no
condition or warranty that the vehicle is roadworthy, or as to
its age, condition, or fitness for any purpose, is given by the
owner or Implied herein." The car was shown to the hirer. After
the conclusion of the agreement the car was towed to the hirer's

53. (1962) 2 QB 508.

54. (1956) 1 WLR 936.

 327

house in such deplorable condition that it would not run. Before

delivery its new tyres had been replaced by old ones, there were

two broken pistons, and chrome strips round the body had been

removed. The cost of putting the car in that condition in which

the hirer had seen it, was estimated at $150. It was held that

inspite of the exemption clause excluding the liability of the

owner, of the car, the hirer was entitled to reject the car on the
ground that there was fundamental breach of contract in so far as

the car supplied was fundamentally different from the one showed

to the hirer.

(b) Strict Interpretation of the Exemption Clause:

Another device adopted by the courts to negative the attempt

of the seller to exclude or restrict his liability by an

exemption clause in the agreement has been by strict

CC
interpretation of the exemption clause . In. Wallis v. Pratt

there was sale by sample of gods described as "English sainfoin

seeds". There was an exemption, clause in the agreement readings:

"The sellers give no warranty express or implied, as to growth,

description or any other matters." An inferior quality of seeds

known as "Giant sainfoin seeds" were actually supplied. The two

kinds of seeds were indistinguishable and the defect could be

known when the crop was ready. The buyers claimed damages

equivalent to the value of the crop out of the two kinds of

seeds, and the seller pleaded the exemption clause in support of

his defence. It was held that the exemption clause excluded

liability only in respect of a 'warranty' , whereas in this case

55. (1911) AC 394 .

 328

there was a breach of 'condition' that when the goods are sold by
sample as well as description they should correspond not only to

the sample but description also, and therefore the seller was
held liable for the breach of condition..

Another illustration of a similar illustration is the case

of Andrews Brothers v. Singer and Co. Ltd.,In this case there
was contract for the sale of a "new saloon car" from the
manufacturers of Singer cars. A second hand car was supplied
instead. The sellers pleaded non-liability on the ground that the
contract was entered into subject to an exemption clause reading:
"All conditions, warranties and liabilities implied by statute,
common law or otherwise are excluded." It was held that what was
a excluded was the liability in respect of an 'implied' condition
or warranty, whereas in this case there was breach of an express
condition that the car was a new one. The seller was therefore
held liable.

(II) Statutory Modifications:

Despite a favorable attitude towards the buyer, the courts

could not adequately protect the buyer's interest in all the
situations. The statutory modifications, therefore, became
imperative. Such modifications have been brought about by the
Supply of Goods (Implied Terms) Act, 1973, The Unfair Contract
Terms Act, 1977, and now by the re-framing of the Sale of Goods
Act, 1979. In view of the statutory modifications brought about
since 1973, the position of law as exhibited by various

56. (1934) 1 KB 17.

 329

modifications from time to time, is examined as under: The

position of English Law on this subject prior to and after the
i

various amendments is also reviewed:

(i) Position Prior to 1979 (English):

The Supply of Goods. (Implied Terms) Act, 1973, imposed

restrictions on the right of exclusion of liability arising from
implied terms and conditions contained in the Sale of Goods Act,
1893. Section 55 of the Act was amended by the Supply of Goods
(Implied Terms) Act, 1973. Some of the provisions of Section 55,
as amended by the Act of 1973, are:

55(3).In the case of contract of sale of goods, any terms of

that or any other contract exempting from all or any of
the provisions of Section 12 of this Act shall be
void.
(4)In the case of a contract of sale of goods, any terms
of that or any other contract exempting from all or any
CO ELQ
of the provisions of Section 13, Section 14 or
Section 15^ of this Act shall be void in the case of a
consumer sale and shall, in any other case, not be
enforceable to the extent that it is shown that it
would not be fair or reasonable to allow reliance on
the term.
(7) In this section "consumer Sale" means a sale of goods

57. Section 12 deals with the implied undertaking as to title

etc.

58. Section 13 deals with the implied Condition in a sale

bydescription.

59. Section 14 contains implied undertakings as to quality or

fitness by way of exceptions to the rule of Caveat
Emptor.

60. Section 15 contains implied condtions in a sale by

sample.
 330

(other than sale by auction or by competitive tender)

by a seller in the course of a business where the
goods: . ,
(a) are of a type ordinarily bought for private use or
consumption; and
(b)are sold to a person who does not buy or hold
himself out as buying them in the course of a
business.

The main effect of the amendment of the Act in 1 973 was to

take away the right to exclude liability arising out of breach of
implied conditions, as to title etc. As regards other implied
conditions, i.e., those relating to sale by description, as
regards quality or fitness of the goods for a particular purpose,
as to implied conditions in a sale by sample, they could not be
contracted out at all in a consumer sale, whereas in case of non­
consumer sale they could be contracted out only by reasonable
terms in the contract.

Further amendments were made by the Unfair Contract Terms

Act, 1977 (which came into force on February 1, 1978) and that is
why Section 55(3) of the Sale of Gods Act, 1979 provides that the
position on this point prevailing between 16 May 1973 and 1
February 1978 is governed by para 11 of Schedule 1 of the
(English) sale of Goods Act, 1979. That para simply incorporates
Section 55 of the Sale of Goods Act as it stood on. those dates.

The Unfair Contract Terms Act, 1977 in its Section 6

contains provisions, which were earlier contained in Section 55
of the Sale of Goods Act since 1973. Sub-sections (3) to (11) of

Section 55 stand replaced and reppelled. Section 6 reads as

under:
 331

6(1) Liability for breach of the obligation arising from:

(a)Section 12. of the Sale of Goods Act 1893 (Seller's
implied undertakings as to titls, etc.):
(b)Section 8 of the Supply of Goods Implied (Terms) Act
1973 (The corresponding thing in relation to hire-
purchase) , cannot be excluded or restricted by
reference to any contract term.
(2) As against a person dealing as consumer, liability for
breach of the obligations arising from:
(a) Section 13, 14, or 15 of the 1893 Act (seller's
implied undertakings as to conformity of goods with
description or sample, or as to their quality or
fitness for a particular purpose):
(b) Section 9,10 or 11 of 1973 Act (the corresponding
things in relation to hire-purchase).
(3) As against a person dealing otherwise than as consumer,
the liability specified in sub-section (2) above can be
excluded or restricted by reference to a contract term,
but only in so far as the term satisfies the
requirement of reasonableness.
(4) The liabilities referred to in this section are not
only the business liabilities defined by Section 1(e),
but include those arising under any contract of sale of
goods or hire-purchase agreement.

Another provision in the Act of 1977 which deals with the

question of exclusion of liability which may arise when the goods
are defective, is contained in Section 5 of the Act. Restriction
is placed on exclusion of liability if there is. negligence. The
r- -i

type of liability had arisen in Donoghuse v. Stevenson:0

61 . (1932) AC 562.
 332

5(1) In the case of goods of a type ordinarily supplied for

private use of consumption, where loss or damage-
fa) arises frbm the goods providing defective while in
consumer use; and
(b)results from the negligence of a person concerned in
the manufacture or distribution of the goods, liability
for the loss or damages cannot be excluded or
restricted by reference to any contract term or notice
contained in or operating by reference to a guarantee
of the goods.
(2)For these purposes-
(a)goods are to be regarded as "In Consumer use" when a
person is using them, or has them in this possession
for use, otherwise than exclusively for the purpose
of a business; and
(b)anything in writing is a guarantee if it contains or
purports' to contain some promise or assurance
(however worded or presented) that defects will be
made goods by complete or partial replacement, or by
repair, monetary compensation or otherwise.
(3) This section does not apply as between the parties to a
contract under or in pursuance of which possession or
ownership of the goods passed.

Apart from specific provisions in the form of Sections 5 and

6 concerning the sale of goods, there are other provisions in the
Unfair Contract Terms Act, 1977, relating to contracts in general
and thus they can include even the contract of sale as well.
Restrictions have also been placed regarding avoidance of
negligence liability. If the negligence results in death or
personal injury such liability cannot be excluded or restricted
by a contract term. Liability for other loss or damage, the
exclusion or restriction on liability for negligence is possible
if such contract term or notice is reasonable. Section 2 of the
 333

Act makes the following provisions in this regard:

2(1) A person cannot by reference to any contract term or to

a notice given to persons generally or to particular
persons exclude or restrict his liability for death or
personal injury resulting from negligence.
(2) In the case of other loss or damage, a person cannot so
exclude or restrict his liability for negligence except
in so far as the term or notice satisfies the
requirement of reasonableness.
(3) Where a contract term or notice purports to exclude or
restrict liability for negligence a person's agreement
to or awareness of it is not of itself to be taken as
indicating his voluntary acceptance of any risk.

As a consequence of the above stated provision, if in a

situation like that having arisen in Priest v Last, ^ Grant v.
Australian Knitting Mills,^ Frost v. Avelsbury Diary Co.,^ and
/r c
Jackson v. Watson, 3 if the seller intends to avoid his liability
as had arisen in those case, it may not be possible for him to do
that.

If it is not a case of personal injury, e.g., a defective

62. (1903) 2 KB 148. The defective hot water bottle had burst
and injured buyer's wife.

63. (1936) AC 83. Certain chemicals in the underwear had

caused dermatitis to the buyer.

64. (1909) KB 193. The contents of the tin of salmon were

injurious and unfit for human consumption, and the same
had resulted in the death of the buyer's wife.

65. (1905) 1 KB 608. Milk contained typehoid germs, the

buyer's wife, who consumed the same, was infected by the
disease of which she died.
 334

watch which does not give satisfactory service inspite repeated

repairs, as was the position in Raghava Menon v. Kuttappan Nair D
1

where the seller was held liable, there may not be any exclusion
or restriction of liability unless the contract term or notice
satisfies the requirement of reasonableness.

(ii) Position After 1979:

The Sale of Goods Act, 1979, which came into force with
effect from 1st January, 1980 consolidates various amendments
made to the Sale of Goods Act, 1893, and replaces and repeals the
1893‘ Act. Section 55 of the 1979 Act, which contains the
provision regarding the present law relating to the exclusion of
implied terms in a contract of sale, is as under:

55 (1) Where a right, duty or liability would arise under a

contract of sale of goods by implication of law, it
may (subject to the Unfair Contract Terms Act 1977)
be negatived or varied by express agreement, or by
the course of dealing between the parties, or by
such usage as binds both parties to the contract.
(2) As express condition or warranty does not negative a
condition or warranty implied by this Act unless
inconsistent with it.

(Ill) Summary: English Law:

It has been noted above that Section 55 of the Sale of Goods

Act, .1979, which deals with the question of exclusion of
liability has been made subject to the provisions of the Unfair

66. A.I.R. 1962 Ker. 318.

 335

Contact Terms Act, 1977. The restrictions on the right of the

- seller to exclude liability work out to be as under:

(1) Liability for breach of obligations arising from sailer's

implied undertakings as to title etc. cannot be excluded or
restricted by reference to any contract term.
Liability for breach of obligations other than those stated
above, i.e., in respect of obligations arising from implied
undertakings in case of sale of goods by description or
sample, or as to their quality or fitness for a particular
purpose, cannot be excluded or restricted by reference to
any contract term against a consumer. But as against a non­
consumer the above stated undertakings can be excluded or
restricted only if the terms in that respect satisfy the
requirement of reasonableness.
(2) Liability for the loss or damages caused by defective goods
while in consumer use cannot be excluded or restricted by
reference to any contract term or notice contained in or
operating by reference to a guarantee of the goods. By this
provision the kind of liability as had arisen in Donoghue v.
Stevenson for negligence, cannot be negatived.
(3) A person cannot by reference to any contract term or to a
notice given to persons generally or to particular persons
exclude or restrict his liability for death or personal
injury resulting from negligence. In the case of other loss
or damage, restriction or exclusion of liability is possible
if the term or the notice satisfies the requirement of
reasonableness. This provision affects the right to exclude
the kind of liability as had arisen in Priest v. Last, Grant
v. Australian Knitting Mills, Frost v. Avlesbury Dairy., or
 336

Jackson v. Watson.

It is be noted that the restrictions on the exclusion of

liability as incorporated by the English Statues suffer from
certain discrepancies and do not adequately protect the buyer's
interest in the following ways:

1. As regards exclusion or restriction of liability in respect

of implied undertaking is concerned, a distinction is drawn
between undertakings as to title etc. and other undertaking.
In the case of former the seller's right to negative such
liability has been negatived, whereas in the case of latter
a distinction has been drawn between consumer and non­
consumer sales. It is only in case of consumer sales that
the liability cannot be negatived, whereas in case of non­
consumer sales the contract which excludes or restricts the
liability is valid if the restrictions imposed are not
unreasonable.
It is submitted that the distinction between different kind
of undertakings and then a further distinction between
consumer and non-consumer sales does not appear to be
justified Unless the seller's right to exclude or restrict
liability in respect of obligations arising from various
implied conditions and warranties is completely withdrawn,
the purpose behind providing such implied stipulations in
the Act would be frustrated.
(2) As regards liability for the loss or damage caused by
defective goods, a distinction is drawn between the goods
being in the consumer use or their not being so. If the
goods supplied are defective the liability should arise in
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the same manner without any distinction as to the fact

whether the goods,are in the consumer use or not.
(3) As regards exclusion or restriction of liability for
negligence, a distinction is drawn between death or personal
injury on the one hand and other kinds of injury on the
other. In case of the former the liability cannot be
excluded or restricted, whereas in the case of the latter
the exclusion or restriction is possible if the contract
term or notice satisfies the requirement of reasonableness.
It is submitted that if the seller or the manufacturer is
negligent his liability should arise in the same manner
irrespective of the fact whether the resulting damage causes
death, personal injury or any other kind of damage. The
damages payable, of course, may depend on the kind of damage
caused.

(IV) Indian Positon:

In India also there is need for the protection of the

buyer's interest against the possible exclusion or restriction of
liability by the seller in respect of implied conditions and
warranties contained in the Sale of Goods Act, or otherwise.

The Law Commission in its 8th Report (1958) looked to the

working of the Sale of Goods, Act, but this aspect of the problem
was not referred to= Similarly, the question of exclusion of
liability in contract in general was not considered by the law
Commission in its 13th Report (1958) on the working of the Indian
Contract Act. With a view of granting adequate protection to the
buyer and the consumer there is an urgent need for statutory
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amendments in India. It is submitted that the following statutory

amendments be made:

(A) Section 16 (4) of the Sale of Goods Act be repealed, and an

express provision be made so that the seller is prevented
from excluding his liability arising from implied
stipulations contained in Sections 14 to 17 of the Act. For
that purpose a new Section 17-A can be added, which may read
as under:

17 (A) Exclusion of Liability as to implied stipulations.

Liability for breach of obligations arising from any
of the implied undertakings contained from Sections
14 to 17 cannot be excluded or restricted by any
contract term, or course of dealing between the
parties, or usage, or in any other manner.

(B) Section 62 of the Sale of Goods Act should also be amended.

The present Section permits the right, duty or liability
arising under a contract of sale by implication of law, to
be negatived or varied. Right to exclude or restrict
liability should be done away with, and there should be an
express provision stating that liability for damage arising
from negligence on the part of the seller in supplying
defective goods, cannot be excluded or restricted, by any
contract term, course of dealing between the parties or
usage. The amended Section 62 should be as under:

Section 62 Exclusion of Seller's liability

for negligence, etc. "Where defective goods
are supplied under a contract of sale due to
fault or negligence on the part of the
seller, the liability arising in respect
thereof cannot be excluded or restricted by
any contract term, or course of dealing
between the parties, or usage, or in any
other manner".