SPECIAL CONTRACT

ASSIGNMENT
ON
CONDITIONS AND WARRANTIES

SUBMITTED BY – SANDEEP KUMAR SUBMITTED TO – ASST. PROF POOJA AGRAWAT

ROLL NO – RL1904A22

LLB (1st) YEAR

SUBJECT – SPECIAL CONTRACT (LAW202)

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INDEX :-
1. INTRODUCTION

2. EVOLUTION AND DEVELOPMENT

3. DEFINITION

4. DIFFERENCE BETWEEN CONDITION AND WARRANTY

5. SECTION 13 OF SALE OF GOODS ACT 1930

6. EXPRESS AND IMPLIED CONDITION AND WARRANTIES SECTION (14-17)

7. SECTION 14 (A) – CONDITIONS AS TO TITLE

8. SALE BY DESCRIPTION : - SECTION 15

9. SALE BY SAMPLE SECTION – 17

10. SALE BY SAMPLE AS WELL AS DESCRIPTION : - SECTION 15

11. CONDITION AS TO MERCHANTABILITY: - SECTION 16 (2)

12. WARRANTY AS TO QUIET POSSESSION: - SECTION 14(B)

13. WARRANTY AS TO NON ENCUMBRANCE: - SECTION 14 (C)

14. C WARRANTY AS TO QUALIFY OR FITNESS BY USAGE OF TRADE:- SECTION

16 (3)

15. CAVEAT EMPTOR

16. REFERENCE

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 1. INTRODUCTION :-

At the time of selling the goods, a seller usually makes certain statements or representations with
a view to induce the intending buyer to purchase the goods. Such representations are generally
about the nature and quality of the goods and about their fitness for the goods and about their
fitness for the buyer’s purpose. These representations aim at providing satisfaction to the buyer.
Some of these representations are merely opinion which does not form a part of contract of sale,
while some of them become a part of contract of sale. A representation which forms a part of the
contract of sale and affects the contract is called a ‘stipulation’, which may be either a condition
or a warranty denote the promise made by the seller, the Sale of Good Act recognizes them
separately as both differ in their nature1.

Condition: If a stipulation is such that it affects the very basis of the contract, it is a condition. In
other words condition is a stipulation which goes to the root of the contract and a breach of the
same would allow the buyer to avoid the contract.

Warranty: If the promise is such that it is collateral to the main purpose of the contract it is a
warranty. Therefore a warranty refers to a stipulation which is attached to the main contract and
a failure of the same does not allow a buyer to avoid the contract.

02) EVOLUTION AND DEVELOPMENT 2:-

An agreement enforceable by law is known as contract according to the Indian Contract law,
1872.Law of contract is very vast and contains many internal subjects to be discussed. Therefore
in the context of law of contract we will be going to discuss about the conditions and warranty in
the law of contract. Condition and Warranty are the terms we regularly hear in our daily life.
Like for example we can say that if a seller offers some goods to consumer then there are some
conditions that will be applied if the consumer wants to buy that particular good. The literal
meaning of the term condition is the state of something with regard to its appearance, quality or
working order or the other definition could be the circumstances or factors affecting the way in
which people live or work especially to their well-being.
1
) https://unacademy.com/lesson/conditions-and-warranties/IHPARWAU
2
) https://www.lawteacher.net/free-law-essays/commercial-law/conditions-and-warranties-in-sale-of-goods-
commercial-law-essay.php
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According to law, condition means a future or uncertain event upon the happening of which
certain rights or obligations will be enlarged, created or destroyed. According to the legal
definition condition is the stipulation which is essential to the main purpose of contract. It goes
to the root of the Contract. Its non-fulfillment upsets the basis of contract.

Talking about the warranty the literal meaning of the term warranty is justification or valid
grounds for an act or a course of action .According to law the definition is an assurance by the
seller of property that the goods or property are as represented or will be as promised. In simple
words warranty can be explained as for example if a seller sells a product then the consumer gets
a warranty card from the seller in this case the warranty card is the assurance of the product in
which if the product gets damaged in certain time limit as conditions mentioned in the card hen
the consumer can claim for the repair or replacement of the product. This is mostly in today’s
scenario. Warranty can also be said a written guarantee issued to the purchaser of an article by its
manufacturer promising to repair or replace it if necessary within a specified period of time.

The history of condition and warranty has a very long history in India 3. We can find the same in
famous “Arthshastra” written by the great Chanakya in 4th century. By July 1, 1930 the law of
sale of goods in India was covered by chapter VII of Indian Contract Act, 1872. Indian Contract
Law itself is based on the common law of the United Kingdom and the laws of the sale of goods
in India are consistent with the principles of common law of the United Kingdom, including
commercial law. The British law of sale of goods was codified in 1893 by the enactment of sale
of goods Act to meet the needs of a growing society. This Act is in effect an additional definition
or interpretation section and supplies a want long felt in India. At the time when the contract act
was passed the phrase ‘warranty’ has been and used with several different meanings and shades
of meaning and the difficulty had been increased by some of those meanings overlapping some
of the meaning of the word ‘condition’. The contract Act used the word ‘warranty” in the
ambiguous sense and did not define it. The result was that the court had to decide on the
construction of each section whether the word warranty was used in the strict sense in which it
was used, or in the wider sense of the English ‘condition’, as it was in 1182. The present act

3
) Raj, Manish, Condition and Warranty in Contract Law of India (February 3, 2008). Harvard Black Letter Law
Journal .
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avoids this confusion and uses the words ‘condition’ and warranty and draws a clear distinction
between the two.

03) DEFINITION :-

A condition is referred to as, an essential element attached to the subject matter of an agreement
which is mentioned by the buyer to the seller and is either expressed or implied while entering
into the contract. The buyer can refuse to accept the goods delivered by the seller, in case of non-
compliance with the condition mentioned by the seller in the contract. The condition may be
express or implied.

The term ‘condition’ is defined in section 12(2) of the sale of goods act 1930 as under: “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 repudiated4.”

For example - If while entering into a contract, the buyer mentions (in words or writing) that the
goods are to be delivered to him before a given date, the date is taken as a condition to the
contract since the buyer expressed it.

Whereas, if a buyer contracts to buy a red colour saree for her ‘wedding’ which is to be held on a
date mentioned to the seller, then the time is the implied condition for the contract. Even if the
buyer doesn’t mention the date of delivery (but has mentioned the date of the wedding or
occasion), it is implied on the part of the seller that the garment is to be delivered before the
mentioned date of the wedding. In this case, the seller is bound to deliver the garment before the
date of the wedding as the delivery of the garment after the said date of the wedding is of no use
to the buyer and the buyer can refuse to accept the same since the condition to the contract is not
fulfilled.

A warranty is referred to as extra information given with respect to the desired good or its
condition. The warranty is of secondary importance to the contract for its fulfillment. Non-
compliance of the seller to the warranty of the contract does not render the contract repudiated
and hence, the buyer cannot refuse to buy the good but can only claim compensation from the
buyer.

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BARE ACT, INDIAN CONTRACT ACT 1872, (2019 EDITION).
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The term “Warranty” is defined in section 12 (3) of sale of goods act 1930 as under: “A warranty
is stipulation collateral to the main purpose of the contract , the breach of which gives rise to
acclaim for damages but not a right to reject the goods and treat the contract as repudiate5”

04) DIFFERENCE BETWEEN CONDITION AND WARRANTY6:-

BASIS CONDITION WARRANTY

Nature A condition is stipulation that is A warranty is a stipulation that is

essential to the main purpose of the collateral to the main purpose of the
contract. contract.

Significance It essential to the very purpose of the It cannot be considered as failure to

contract that its non-performance may perform the contract.
be considered as failure to perform the
contract.

The aggrieved party may treat the The aggrieved party cannot
Consequence of contract as repudiated. repudiate the contract but can claim
breach damages.

A breach of condition may be treated A breach of warranty cannot be

Treatment as breach of warranty. treated as breach of condition.

05) WHEN CONDITION TO BE TREATED AS WARRANTY - SECTION 137

1) Where a contract of sale is subject to any condition to the fulfilled by the seller, the buyer may
waive the condition or elect to treat the breach of the condition as a breach of warranty and not
as a ground for relating the contract as repudiated.
5
) BARE ACT , INDIAN CONTRACT ACT 1872, (2019 EDITION)
6
)BUSINESS LAW , PC TULSIAN (2017 EDITION)
7
) MERCANTILE LAW , MAHIPAL JAIN (2013 EDITION)
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(2) Where a contract of sale is not severable and the buyer has accepted the goods or part thereof,
the breach of any condition to be fulfilled by the seller can only be treated as a breach of
warranty and not as a ground for rejecting the goods and treating the contract as repudiated,
unless there is a term of the contract, express or implied, to that effect.

(3) Nothing in this section shall affect the case of any condition or warranty fulfillment of which
is excused by law by reason of impossibility of otherwise.

In the following cases, a contract is not avoided even on account of a breach of a condition:

(1) Where the buyer altogether waives the performance of the condition. A party may for his
own benefit, waive a stipulation.

(2) Where the buyer elect to treat the breach of the conditions, as one of a warranty. That is to
say, he may claim only damages instead of repudiating the contract.

(3) Where the contract is non-severable and the buyer has accepted either the whole goods or any
part thereof. Acceptance means acceptance as envisaged in section 72 of the Indian contract Act,
1872.

(4) Where the fulfillment of any condition or warranty is excused by law by reason of
impossibility or otherwise.

Example: A agrees to supply B 10 bags of first quality sugar at Rs. 625 per bag but he
supplies only second quality sugar, the price of which is Rs. 600 per bag. There is a breach
of condition and the buyer can reject the goods, but if the buyer so elects, he may treat it as
a breach of warranty, accept the second quality sugar and claim damages at Rs. 25 per bag.

06) EXPRESS AND IMPLIED CONDITION AND WARRANTIES 8 : - (SECTION 14

-17)

Conditions and Warranties may be either express or implied. They are express when the terms of
the contract expressly state them. They are implied when, not being expressly provided for.

8
) MERCANTILE LAW , MAHIPAL JAIN (2013 EDITION)
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  EXPRESS CONDITIONS - Express conditions are those which have been expressly
agreed upon by both the parties at the time of making the contract of sale.
 EXPRESS WARRANTIES - Express warranties are those which have been expressly
agreed upon by both the parties at the time of formation of the contract of sale.
 IMPLIED CONDITIONS - Following conditions are implied in a contract of sale of
goods unless the circumstances of the contract show a different intention.

07) SECTION 14 (A) – CONDITIONS AS TO TITLE :-

In every contract of sale, unless there is an agreement to the contrary, the first implied condition
on the part of the seller is that –

a. ) In case of sale, he has a right to sell the goods, and

b. ) In case of an agreement to sell, he will have right to sell the goods at the time when the
property is to pass In simple word, the condition implied is that the seller has the right to
sell the goods at the time when the property is to pass. If the seller’s title turns out to be
defective, the buyer must return the goods to the true owner and recover the price from
the seller.

In simple word, the condition implied is that the seller has the right to sell the goods at the time
when the property is to pass. If the seller’s title turns out to be defective, the buyer must return
the goods to the true owner and recover the price from the seller.

EXAMPLE - A purchased a tractor from B who had no title to it. After 2 months, the true owner
spotted the tractor and demanded it from A. Held that A was bound to hand over the tractor to its
true owner and that A could sue B, the seller without title, for the recovery of the purchase price.

08) SALE BY DESCRIPTION : - SECTION 159

Where there is a contract of sale of goods by description, there is an implied condition that the
goods shall correspond with the description.

9
) MERCANTILE LAW , ASHOK SHARMA (2014 EDITION).
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This rule is based on the principle that “if you contract to sell peas, you cannot compel the buyer
to take beans. “The buyer is not bound to accept and pay for the goods which are not in
accordance with the description of goods.”

EXAMPLE - A at Kolkata sells to B twelve bags of ‘waste silk’ on its way from Moradabad to
Kolkata. There is an implied condition that the silk shall be such as is known in the market as
‘waste silk’. If it is not, B is an entitled to reject the goods.

09) SALE BY SAMPLE : - SECTION 1710

In a contract of sale by sample, there is an implied condition that

a) The bulk shall correspond with the sample in quality;

b) Buyer shall have a reasonable opportunity of comparing the bulk with the sample.

EXAMPLE - A company sold certain shoes made of special sole by sample for the French
Army. The shoes were found to contain paper not discoverable by ordinary inspection. Held, the
buyer was entitled to the refund of the price plus damages.

CASE LAW - In Drummond and sons vs. Van Ingen, A cloth dealer placed an order with a
manufacturer of worsted suiting on the basis of sample shown. The supplied cloth contained a
defect which made it unfit for ordinary wear. The same defect was present in the sample also, but
could not have been discovered any reasonable inspection of it. The seller was held guilty of
breach of implied condition.

10) SALE BY SAMPLE AS WELL AS DESCRIPTION : - SECTION 15

Where the goods are sold by sample as well as by description the implied condition is that the
bulk of the goods supplied shall correspond both with the sample and the description.

CASE LAW – In Nichal vs. Godts, Nichal agreed with Godts to sell certain oil described as
refined sunflower oil, warranted only equal to sample. The goods tendered were equal to sample,
but contained a mixture of hemp oil. Godts can reject the goods and was entitled to recover
damages for breach of condition.

10
) MERCANTILE LAW , ASHOK SHARMA (2014 EDITION).
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CASE LAW - In Wallis vs. Pratt, A contracted with B for the sale of “baby corn” seeds. A
showed the seed to be and stated that they were seeds of “baby corn”. On growing them B came
to know that they were “American corn” and not “baby corn”. The defect in the seeds could not
be detected unless sown and held that A could recover damages.

10) CONDITIONS AS TO QUALIFY OR FITNESS 11 : - SECTION 16(1)

EXAMPLE - A bought a set of false teeth from B, a dentist. But the set was not fit for A ‘s
mouth. A rejected the set of teeth and claimed the refund of price. It was held that A was entitled
to do so as the only purpose for which he wanted the set of teeth was not fulfilled.

CASE LAW - In Baldryvs vs. Marshall, Marshall asked Baldry, a car dealer to suggest him a
suitable car for touring purpose. Baldry suggested buying a Bugatti Car. Marshall accordingly
purchased the car, but found unfit for the touring purpose .Held, the suitability of the car for
purpose being the condition, it was so important that it is non– fulfillment defeated the every
purpose of the buyer .Hence, Marshall could return the car and get back the price.

11) CONDITION AS TO MERCHANTABILITY: - SECTION 16 (2)

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.

EXAMPLE - A bought a black velvet cloth from C and found it to be damaged by white ants.
Held, the condition as to merchantability was broken.

12) WARRANTY AS TO QUIET POSSESSION: - SECTION 14(B)12

An implied warranty that the buyer shall have and enjoy quiet , possession of the goods. That is
to say, if the buyer having got possession of the goods is later on disturbed in his possession, he
is entitled to sue the seller for the breach of the warranty.
11
) https://blog.ipleaders.in/conditions-and-warranties/
12
) BUSINESS LAW , Dr ANGAD TIWARY , (2018 EDITION)
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CASE LAW - In Nibblet vs. Confectioners, A firm agreed to sell condensed milk of a certain
standard to be supplied in tins to the plaintiff. The tins supplied were found to infringe the
trademark of another company of repute. Due to this reason the goods were detained by the
customs authority. The plaintiff was allowed to sell the tins only if they remove the label so as
not to infringe the trademark of the other firm. The plaintiff did so and had to suffer loss due to
the less market value of the product. In this case the defendant did not had the right to sell due to
which the plaintiff could not enjoy quit possession of the goods. Therefore the plaintiff was
allowed to claim damages.

13) WARRANTY AS TO NON ENCUMBRANCE: - SECTION 14 (C)

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.

Example: A pledges his car with C for a loan of Rs. 15000 and promises him to give its
possession the next day. A then sells the car immediately to B, who purchased it on good faith,
without knowing the fact B. Then B files a suit against A for recovery of the money with
interest.

14) WARRANTY AS TO QUALIFY OR FITNESS BY USAGE OF TRADE:-SECTION 16

(3)

An implied warranty as to quality or fitness for a particular purpose may be annexed or attached
by the usage of trade.

Disclosure of dangerous nature of goods: Where the goods are dangerous in nature and the
buyer is ignorant of the danger, the seller must warn the buyer of the probable danger. If there is
a breach of warranty, the seller may be liable in damages.

CASE LAW: In Clarke vs. Army &Navy Co-operative society Ltd. , respondent sold a tin of
disinfectant powder to plaintiff. He knew that it was likely to be dangerous to plaintiff, if it was
opened without special care being taken. Plaintiff opened the tin whereupon the disinfectant
powder flew into his eyes, causing injury. Held respondent was liable for the damages caused to
plaintiff, as he should have warned plaintiff of the probable danger.

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15) CAVEAT EMPTOR: -

'Caveat Emptor' is a fundamental principle of the law relating to sale of goods. It means 'Caution
Buyer', Let the buyer beware'. In other words, it is no part of the seller's duty to point out defects
of the goods he offers for sale. The buyer must examine the goods and find out their suitability
for the purpose he buys them for13.

Examples a) A person buys a readymade shirt for his son, he will not have a right to return or
exchange the same if the shirt doesn't exactly fit his son, too tight or loose.

b) Pigs were sold 'subject to all faults', and these pigs, being infected, caused typhoid to other
healthy pigs of the buyer. It was held that the seller was not bound to disclose that the pigs were
unhealthy. (Goddard Hobbs) .The doctrine of 'Caveat Emptor' is however, subject to the
following exceptions:

1) Where the seller makes a misrepresentation and the buyer relies on that representation, the
rule of 'Caveat Emptor' will not only apply and the contract entered between the parties would
be a contract voidable at the option of the buyer.

2) Where the seller actively conceals a defect in the goods, so that on a reasonable examination
the same could not be discovered, or where the seller malces a false representation amounting to
fraud, and the buyer, relying upon the false representation, enters into a contract wit11 the buyer,
in both these circumstances the resulting contract would be a voidable contract. The buyer's
remedy in that is that he can put the contract to an end and call also claim damages from the
seller for fraud. 3 Where the buyer makes known to the seller the purpose for which he is buying
the goods, so as to show that the buyer relies on the seller's skill or Judgement and the seller
happens to be a person whose business is to sell goods of that description, then there is an
implied condition that the goods shall be reasonably fit for such purpose. The rule of 'Caveat
Emptor' will not apply in such cases.

4) In case of sale by description where the goods are bought from a seller where the goods are
bought from a seller who deals in such goods there is an implied condition as to their being of a
merchantable quality ,they should be capable of being used as such goods.

13
) https://shodhganga.inflibnet.ac.in/bitstream/10603/186021/14/14_chapter%209.pdf
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For example, a cricket bat should be fit enough to play cricket with a 'cricket ball'. If the goods
are not found to be of merchantable quality, the seller cannot take the defence of the doctrine of
Caveat Emptor. But, if the buyer has examined the goods, there is no implied condition as
regards defects which such examination ought to have revealed, i.e., in such cases the rule of
Caveat Emptor will be applicable.

5) An implied warranty or condition as to quality or fitness for a particular purpose may be

annexed (attached) by the usage of trade Section 16(3). This exception may be explained by the
facts of Jones v. Bowden's case as followed It was usual in the sale of drugs by auction that if the
goods were sea damaged, it should be declared. This usage in effect created an implied condition
that when the drug were sold without such declaration, they were free from the damage. In this
case the seller exhibited the sample without disclosing that the drugs were sea damaged. The rule
of Caveat Emptor would, therefore, not apply here.

6) Where the goods are sold by description and the goods supplied by the seller do not
correspond to the description, this doctrine would not apply.

7) If the goods are sold by sample and the bulk of the goods supplied do not correspond with the
sample, this doctrine would not apply. In addition to it, when the goods are delivered and the
buyer is not provided an opportunity to compare the goods with the sample or where there is any
latent defect in the goods, the doctrine will not apply.

8) In a sale by sample as well as by description, if the bulk of the goods supplied does not
correspond to the sample as well as with description, this doctrine will not apply.

16) REFERNCE :-

a) Books Referred .
1. BUSINESS LAW BY P.C. TULSIAN 2017 EDITION, Mcgraw Hill
publication.

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 2. MERCANTILE LAW BY MAHIPAL JAIN 2013 EDITION, Pearson
Publication.
3. MERCANTILE LAW BY ASHOK SHARMA 2014 EDITION, VK Global
Publications Private Limited.
b) Articles and Bare acts Referred .

1. Raj, Manish, Condition and Warranty in Contract Law of India (February 3, 2008). Harvard
Black Letter Law Journal .
2. Bare Act , Indian contract act 1872, 2019 (Edition).
3. The sales of goods act , 1930 .
c) Websites Referred.
1. https://unacademy.com/lesson/conditions-and-warranties/IHPARWAU
2. https://www.lawteacher.net/free-law-essays/commercial-law/conditions-and-
warranties-in-sale-of-goods-commercial-law-essay.php
3. https://blog.ipleaders.in/conditions-and-warranties/
4. https://shodhganga.inflibnet.ac.in/bitstream/10603/186021/14/14_chapter%209.pdf
5. http://comtax.up.nic.in/Miscellaneous%20Act/the-sale-of-goods-act-1930.pdf

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