Conditions and Warranties

Learning Outcome

Illustrate the meaning and types of

conditions and warranties and
explain the consequences of
breaching the same
 Conditions and Warranties
• A contract contains certain stipulations and
terms.
 Condition
• According to section 12 (2) “ A condition is a
stipulation which is essential to the main
purpose of the contract”
• The breach of which gives right to the
aggrieved party to treat the contract as
repudiated.
 Essential features of condition
• Essential to the main purpose of contract.
• Its non fulfillment would defeat the very
purpose of the contract.
• Aggrieved party can repudiate the contract.
 Warranty
• A warranty is a stipulation collateral to the
main purpose of the contract, the breach of
which gives rise to claim for damages, but not
to a right to reject the goods and treat the
contract as broken.
 Example
• P goes to R, a horse dealer and says, “ I want a
horse which can run at a speed of 30
kilometers per hour”. The horse dealer points
out a particular horse and says, “This will suit
you”. P buys the horse. Later on, P finds that
the horse can run only at a speed of 20
kilometers per hour.
• This is a breach of ?????????????
• Breach of condition
 Example
• If P says to R that I want a good horse. R
shows him a horse and says, “ This is a good
horse and it can run at a speed of 30
kilometers per hour” and P buys the horse
and finds later on that it can run at a speed of
20 kilometers per hour only,
• there is breach of ?????????????????
• Warranty
 Distinction between condition and
Warranty
Basis Condition Warranty
Difference as to Essential to the main Collateral to the
value purpose of the main purpose of the
contract contract
Difference as to Aggrieved party can Can claim damages
breach repudiate the only
contract
Difference as to Breach of condition Breach of warranty
treatment may be treated as a cannot be treated as
breach of warranty a breach of
condition
 Express conditions
• The conditions which are agreed upon between the
parties in express words, either written or oral are
express conditions.
 Implied conditions
1. Condition as to title
2. Sale by description
3. Condition as to quality or fitness
4. Condition as to merchantability
5. Condition implied by custom
6. Condition in a sale by sample
7. Condition as to wholesomeness
8. Condition in a sale by sample as well as description.
 Implied conditions
1)Condition as to title:
• It is a presumption that seller is the true owner of
goods.
• Seller’s right to sell the goods is termed as condition
as to title.
 Example
Case : Rowland Vs Divall
• X bought a car from Y & used it for several
months. Later on the police seized the car as
stolen one. Held the buyer could recover the
full price of the car from the seller though he
has used it for several months.
 Implied conditions
2) Sale by description:
• When the goods are sold by describing their qualities
& the buyer relies on that description that is known
as ‘sale by description’.
• The goods shall correspond with description.
.
 Example
Where there was a contract for the sale of a
new car and the car supplied was old one. There
was a breach of condition on the part of the
seller and buyer is entitled to reject the car.
 Quiz Time
• W bought a reaping machine which he had
never seen and which, V, the seller, described
to have been new the previous year and used
to cut only 50 to 60 acres. W found the
machine to be extremely old.
• Can W repudiate the contract???????????
• Yes breach of condition as to sale by
description
 Example
• In an auction sale of a set of napkins and table
cloths, these were described as dating from
the seventh century. The buyer bought the set
after seeing it. Subsequently he found the set
to be an eighteenth century set.
• Could he reject the set?????????????????
• Yes breach of condition as to sale by
description
 Implied conditions
3) Condition as to quality or fitness:
• Ordinarily in a contract of sale there is no implied condition or
warranty as to quality or fitness.
• But, an implied condition is deemed to exist on the part of the
seller that the goods supplied shall be reasonably fit for the
purpose for which buyer wants them, if the following
conditions are satisfied.
 Where goods are ordered for specific purpose and the same is made
known to seller.
e.g hot water bottle

 where buyer buys under a trade name, nothing is implied unless told
to seller
e.g Bugatti Car

Please Note –
Seller is not responsible if
• If goods have number of purposes, the buyer must tell the purpose for which he requires the
good otherwise seller is not responsible
• Where the buyer has an abnormality (unknown to the seller)
Continued…
e.g – An order was placed for some lorries to be
used “for heavy traffic in a hilly area”. The
Lorries supplied were unfit and breakdown.
This is a breach of condition as to fitness.
 Continued…
The buyer should rely on the sellers skills or judgement
e.g. B told to M, a motor car dealer, that he wanted a
comfortable car suitable for touring purposes. M recommended
a bugatti car and B thereupon bought one. The car was
uncomfortable and unsuitable for touring purposes. Held, B
could reject the car and recover the price, and the mere fact that
B bought the car under its trade name did not necessarily
exclude the condition of fitness.
• e.g. G purchased a coat which caused her
inflammation of the skin due to her unusually
sensitive skin.
• Is seller liable????????????????????
• No, specific condition (abnormality) not
disclosed by buyer
 Implied conditions
4) Condition as to merchantability –
 Merchantable means that the goods must be fit for the
ordinary purpose for which such goods are used.

 Merchantable quality means goods must be in saleable

condition

 Where goods are bought by description from a seller

who deals in goods of that description, there is implied
condition that the goods must be of merchantable
quality.
The condition of merchantability is applicable
when,
(i) The goods are sold by description
(ii) The seller deals with such goods
e.g Mohan a blacksmith sells to Das his
old car, no implied condition as to
merchantability applies.
 Example
Case : Morelli V. Fitch & Gibbons:
X asked for a bottle of stone’s ginger wine at Y’s
shop, which was licensed for the sale of
wines. While X was using it, the bottle broke
at the neck & injured him.
Held X was entitled to damages as the bottle
was not of merchantable quality.
Think over it
• A manufacturer supplied 6 car under a contract. car
were found to be dented and scratched.
• Can buyer repudiate the contract??????
• Yes, as goods are not merchantable
 Implied Conditions
5)Condition implied by custom:
An implied condition as to quality or fitness for a
particular purpose may be implied by the
usage of trade.
P asked for a hot water bottle of L, a retail
chemist. He was supplied one which burst
after a few days use and injured P’s wife.
Held L was liable for breach of implied condition

Please note- Here both conditions are applicable

1. Condition as to quality or fitness
2. Condition implied by custom
• Example: A bought a set of false teeth from a
dentist. The set did not fit into A’s mouth.
• Can A reject the teeth??????????????
• yes, there was breach of Condition implied by
custom
6) Sale by sample: implied condition is that
a) The goods must correspond with sample in
quality.
b) The buyer shall have a reasonable opportunity
of comparing the bulk with the sample.
c) The goods shall be free from any hidden defect.
(latent defect)
In a contract for sale of brandy by sample,
brandy colored with a dye was supplied.
Is buyer bound by contract of sale?
• Held, the buyer was not bound to the contract
even though the goods supplied were equal to
sample, as the defects were no apparent on
reasonable examination of sample. (mody v
Gregson).
 Implied conditions
7) Condition as to wholesomeness–
It applies to contract of sale of eatables & provision
(necessities).
• Goods shall be wholesome. (should be in a condition
to consume)
 Example
F bought milk from A. The milk contained
germs of typhoid fever. F’s wife took the milk
and got infection as a result of which she died.
Held, F could recover damages.
(Frost v. Aylesbury Diary Co Ltd. 1905)
 Implied conditions
8.) Condition in a sale by sample as well as
description.
 Implied warranties
1. Warranty of Quiet Possession
(buyer should enjoy the possession of goods)
2. Warranty of freedom from encumbrances
(there should not be any charge on goods)
e.g.
 ???
A, the owner of the watch, pledges it with B.
After a week, A obtains possession of the watch
from B for some implied purpose and sells it to
C. B approaches C and tell him about the pledge.
C has to make payment of pledge amount to B.
Is C entitled to claim compensation from A??
• Yes , as there is breach of warranty of
freedom from encumbrances
3. Warranty as to quality or fitness by usage of
trade
4. Warranty to disclose dangerous nature of
goods
(he must warn the buyer of the probable
danger)
 Caveat Emptor
• Caveat Emptor means LET THE BUYER
BEWARE. It implies that the buyer should buy
the goods by making use of his skill &
judgment.
• If the goods turn out to be defective or do not
suit his purpose or he depends upon his own
skills, he cannot blame anybody except
himself.
 Example
• A purchased a horse from B, for riding
purpose but he did not mention this fact to B.
The horse was not suitable for riding but is
suitable for being driven in the carriage.

• Can A reject the goods????

• Can he claim for damages????
• No, because he did not disclose the purpose.
The rule of caveat emptor will apply.
 Exceptions to the doctrine of caveat
emptor
1. Where buyer relies on seller’s skill & judgment
2. Where purpose is known to the seller
3. Merchantable quality (should be saleable)
4. Usage of trade/custome (purpose is implied by
goods)
5. Where seller makes fraudulent representation.
(latent defect in the goods)
6. Where the goods are bought by sample
7. Where the goods are bought by description
8. Sale under a patent or trade name
A contracts to sell B a piece of silk. B thinks that
it is Indian silk. A knows that B thinks so and
further knows that it is not Indian silk.
A does not correct B’s impression. B afterward
discovers that it is not an Indian silk.
Can he cancel the contract?
• No, because he did not disclose the purpose
or description of the type of silk. The rule of
caveat emptor will apply.
THANK YOU