Introduction

The Sale of Goods Act is complimentary to Contract Act. Basic provisions of Contract Act apply to contract
of Sale of Goods also. Basic requirements of contract i.e. offer and acceptance, legally enforceable agreement,
mutual consent, parties competent to contract; free consent, lawful object, consideration etc. apply to contract
of Sale of Goods also.
The law relating to the sale of goods is codified in the Sale of Goods Act, 1930. It defines sale and agreement
to sell as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a
price and provides that there may be a contract of sale between part owner and another and that the contract of
sale may be absolute or conditional. According to the provisions of this act, a contract of sale is made by an
offer to buy or sell the goods for a price and the acceptance of such offer. The act further provides that the
contract may provide for the immediate delivery of the goods or immediate payment of the price or both or for
the delivery or payment by instalments or that the delivery or payment or both shall be postponed. Provisions
are made in this Act for existing or future goods, perishable goods, ascertainment of price, conditions and
warranties, effects of the contract, delivery to career, duties of seller and buyer, buyer's right of examining the
goods, liability of buyer for neglecting or refusing the delivery of goods, rights of unpaid seller, suits for breach
of the contract, sale, etc.
The Sale of Goods Act is complimentary to Contract Act. Basic provisions of Contract Act apply to contract
of Sale of Goods also. Basic requirements of contract i.e. offer and acceptance, legally enforceable agreement,
mutual consent, parties competent to contract; free consent, lawful object, consideration etc.
By definition a contract of sale means,
“A contract of sale of goods is a contract whereby the seller transfers or agrees to
transfer the property in goods to the buyer for a price.”1
 A contract may be absolute or conditional.2
Thus, following are essentials of contract of sale:
It is contract - all requirements of ‘contract’ must be fulfilled. It is of ‘goods‘- transfer of property is
required. Contract is between buyer and seller, Sale should be for a price. A part owner can sale his part to
another part-owner.
A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The
contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or
for the delivery or payment by instalments, or that the delivery or payment or both shall be postponed.3

1
Defined under Sec 4(1) of the Sale of Goods Act, 1930.
2
As defined under Sec 4(2) of the Sale of Goods Act, 1930.
3
As defined under Sec 5(1) of the Sale of Goods Act, 1930.

1
How Contract of sale is made?
A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The
contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or
for the delivery or payment by instalments, or that the delivery or payment or both shall be postponed. Subject
to the provisions of any law for the time being in force, a contract of sale may be made in writing or by word
of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties.
Thus, credit sale is also a ‘sale’. A verbal contract or contract by conduct of parties is valid. E.g. putting
goods in basket in super market or taking food in a hotel.

Essential characteristics of the contract of sale of goods:

1. Parties to the contract:
There are two main parties to the contract– a buyer and a seller.
Buyer: a person who buys or agrees to buy goods4
Seller: a person who sells or agrees to sell goods5
The two parties are essential for making a sale valid. The contract may between a part owner and
another, but if joint owners distribute property among themselves as per mutual agreement, it is not
considered as ‘sale’ as there are no two parties. One party must make the exchange of goods with the
second party. One individual cannot act as a self-seller as well as a self buyer.

2. Property:
Section 2 (11) describes property as ‘the general property in goods, and not merely a special property.’
General property means transfer of all ownership rights and special property means limited rights transfer.
Transfer of property in sale refers to the transfer of ownership. A mere transfer of possession is not termed as
sale under the Sale of Goods Act 1930. If goods are given for hire, lease, hire purchase or pledge, ‘general
property’ is not transferred and hence it is not a ‘sale’. Similarly if goods remain in possession
of seller after sale transaction is made, the ‘possession’ is with the seller, but ‘property’ is with
the buyer.

3. Price:
Every contract involves a consideration. Under the contract of Sale of Goods, the consideration is money.
Price under Section 2 (10) of the Sale of Goods Act 1930 is, “the money consideration for a sale of
goods.” To make a sale, the exchange must involve money. If goods are exchanged against goods the

4
As defined under Sec 2(1) of the Sale of Goods Act, 1930.
5
As defined under Sec 2(13) of the Sale of Goods Act, 1930.

2
transaction is barter and not covered by the act. However, consideration may be partly in money and partly in
goods.
a. Ascertainment of price:
The price in a contract of sale may be fixed by the contract or may be left to be fixed in manner
thereby agreed or may be determined by the course of dealing between the parties. Section 9(1)
where the price is not determined in accordance with the foregoing provisions, the buyer shall pay the
seller a reasonable price which will be dependent on the circumstances of each particular case.

4. Goods:
“Every kind of movable property other than actionable claims and money; and includes stock and
shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be
severed before sale or under the contract of sale.”6 
 
The goods included are of tangible nature. Goods are said to be in a "delivered state" when they are in such
state that the buyer would under the contract be bound to take delivery of them. Goods are the subject matter
of the contract. A contract of exchange made between the buyer and the sellers without transfer of goods will
not hold good to the contract of sale of goods.

Kinds of Goods:
Goods are identified on the basis of state or condition of purchase into three broad categories:
a. Existing Goods: As mentioned in Section 6(1), these are the goods which are in existence and are
physically present in the seller’s possession. They are further classified as:
 Specific goods: these are the goods identified and agreed upon at the time the contract is
made.7
 Ascertained goods: these are identified after the formation of the contract.
 
 Unascertained goods/generic goods: these are the goods which are not specifically
identified or agreed upon at the time of the contract of sale.
b. Future Goods: Goods to be manufactured or produced or acquired by the seller after making of the
contract of sale.8

6
As per Sec 2(7) of the Sale of Goods Act, 1930.
7
As per Sec 2(14) of the Sale of Goods Act, 1930.
8
As per Sec 2(6) of the Sale of Goods Act, 1930.

3
 c. Contingent Goods: According to Section 6(2), a “contract for the sale of goods the acquisition of
which by the seller depends upon a contingency which may or may not happen” are called contingent
goods.
5. Sale and Agreement to sell:
“Sale is of goods is a contract whereby the seller transfers or agrees to transfer the
property in goods to the buyer, for a price.”9

Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract
is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to
some condition thereafter to be fulfilled, the contract is called an agreement to sell. 
“An agreement to sell becomes a sale when the time elapses or the conditions
are fulfilled subject to which the property in the goods is to be transferred.”10
 
HISTORY OF CONDITION AND WARRANTY
This section 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' had 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 meanings of the word 'condition'. The contract Act used the word 'warranty' in this
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 used1, or in the wider sense of
the English 'condition', as it was in s 1182. The present act avoids this confusion and uses the words 'condition'
and warranty and draws a clear distinction between the two.

Condition and Warranty:

Every kind of contract includes some specifics terms or stipulations regarding the goods of exchange, the price
to be paid, buyers or sellers, the quality of goods, delivery, time of payment and performance etc.
Opening Para of section 16 makes it clear that there is no implied warranty or condition as to quality of fitness
of goods for any particular purpose, except those specified in Sale of Goods Act or any other law. This is the
basic principle of caveat emptor, i.e. buyers beware. However, there are certain stipulations
which are essential for main purpose of the contract of sale of goods. These go the root of contract and non-
fulfilment will mean loss of foundation of contract. These are termed as ‘conditions’. Other stipulations,
which are not essential, are termed as ‘warranty’. These are collateral to contract of sale of goods.

9
As per Sec 4(1) of the Sale of Goods Act, 1930.
10
As per Sec 4(3) of the Sale of Goods Act, 1930.

4
Contract cannot be avoided for breach of warranty, but aggrieved party can claim damages. A breach of
condition can be treated as breach of warranty, but vice versa is not permissible.
A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a
warranty. A condition is a stipulation essential to the main purpose of the contract, the breach of which gives
rise to a right to treat the contract as repudiated. A warranty is a stipulation collateral to the main purpose of the
contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the
contract as repudiated. Whether a stipulation in a contract of sale is a condition or a warranty depends in each
case on the construction of the contract. A stipulation may be a condition, though called a warranty in the
contract.
Some stipulations are essential for the main purpose of the contract. These go to the root of contract and non-
fulfilment will mean loss to the foundation of the contract. These are major contracts called ‘conditions‘.
Some stipulations are collateral to contract of sale of goods. These are the minor stipulations of as called,
‘Warranty’.
Section 62 allows the implied terms and conditions to be excluded by express agreement or by previous
dealings or by usage. The courts have always been hostile towards parties relying on exemption clauses, and
have, wherever possible use the contra proferentem rule, i.e. exclusion clause are construed strictly against the
party seeking to rely on them. This can be seen in the case of Wallis.11
 
Wallis Sen and Wells v Pratt & Haynes12
There was a sale of common sainfoin seed. A clause in the contract excludes “warranties
express or implied, as to growth, description, or any other matters”. The seller delivered giant
sainfoin, and the buyers having accepted it, claimed damages.
Held: the sellers were not protected by the exemption clause because it referred only to warranties, whereas
they had broken a condition.

Conditions:
A condition is a fundamental term going to the root of the contract. In other words, Conditions set down the
primary obligations of the parties. It is a term (oral or written) which goes directly 'to the root of the contract',
or is so essential to its very nature that if it is broken the innocent party can treat the contract as discharged. That
party will not therefore be bound to do anything further under that contract.

11
Wallis Sen and Wells v. Pratt & Haynes (1911) AC 394
12
(1911) AC 394

5
 “A condition is a stipulation essential to the main purpose of the contract, the breach
of which gives rise to a right to treat the contract as repudiated.”13
Condition form the basis of the contract. Its breach give irreparable loss to the aggrieved party, and give the
aggrieved party the right to cancel the contract, refuse to accept the goods and even recover payment. Whether
a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the
contract. A stipulation may be a condition, though called a warranty in the contract Mere stating,
‘Conditions of Contract’ in agreement does not mean all stipulations mentioned are ‘conditions’ within
meaning of 
Section 12(2).
Condition generally refers to promises and the duties they generate. It is usually an event of significance but
this is not always the case as the parties if they so wish can even make an insignificant event a condition.
Condition can be defined as some operative fact Almost any event can be a condition and whether a
stipulation is a condition or not can be decided only after looking at the contract in the light of the surrounding
circumstances and then deciding on the intention of the parties. In present day contracts all conditions refer to
some operative fact which has not yet occurred but which must occur so as to prevent frustration of the
contract.

When a term will be a condition?

The leading textbooks on contract state that a term will be a condition if it satisfied one of the following four
tests, namely
a. If statute provides that it is a condition;
b. If a binding authority requires a court to hold that it is a condition; if every breach, or
c. If the consequences of every breach, goes to the root of the contract; or,
d. If the parties have agreed that it is to be treated as a condition.
The first three of these tests involve well established principles, but the fourth yet remains to be clearly
established.
Express agreement by the parties that one of them shall be able to terminate the contract on the happening of a
breach of a particular term by the, other does not automatically entitle the other party to the full benefits which
flow from that term being a condition. The express agreement gives an option to bring the contract to an end
on the breach of that term, but such an option is no different to an option to bring a contract to, an end on the
happening of any defined event; the fact that the event prescribed is a breach is immaterial. There is an option,
but the option does not affect the nature of the event upon which that option is exercisable. The, textbooks
therefore, are misleading in so far as they suggest, that a term is a condition where there is agreement by the
13
According to Sec 12(2).

6
parties that its breach is to give rise to the innocent party being able to act as though the term breached were a
condition, because the court has the right to investigate whether it is the substance of the agreement that the
term is a true condition, or merely the form. If it is just the form, then the term will in nominate and the,
quantum of damages will depend upon whether the breach was repudiatory at common law. This can be seen
in the above cases.
Bunge Corp v Tradax Export SA14
Bunge Corp is a case that illustrates these difficulties. The argument of the Hong Kong Fir approach was
rejected in Bunge Corp, where „it was affirmed that the question‟ of whether the party’s
benefit has been deprived completely „is relevant only after it has been decided that the term
is innominate.’ In Bunge, Lord Roskill said „the basic principles of construction for
determining whether or not a particular term is a condition remain as before the need of certainty‟.
The court held it was a condition because of the need for certainty when dealing with a time clause in a
mercantile contract.
Although not adopted, the court in Bunge did consider Hong Kong Fir’s intermediate term
approach, showing that it is a leading case which should be acknowledged.
Moreover, the uncertainty of this Hong Kong Fir approach created risk when terminating a contract.
The court may, years later, claim that the withdrawal was previously wrongly decided. Innocent party will
then have to pay the loss suffered by the other party because of the wrong termination.
Having been criticized for its uncertainty, Hong Kong Fir’s intermediate term
approach still survived. With these difficulties, the courts and judges still choose to make it prevail,
proving that the English law system values highly the flexibility which it has brought about. Therefore, Hong
Kong Fir must be an influential key case and common law in English Law of Contract. Lord Wilberforce and
Lord Scaxman both regarded its effect on contract law highly. Lord Wilberforce called Hong Kong Fir
‘seminal’ which has become ‘classical’. Lord Roskill in Bunge acclaimed that Hong Kong
Fir’s judgment was „a landmark in the development of one part of our law of contract‟ in the
20th century.
 
Thompson v LMS Railway15
The plaintiff who could not read gave her niece the money to buy an excursion ticket. On the face of the ticket
was printed "Excursion, For Conditions see back"; and on the back, "Issued subject to the
conditions and regulations in the company's time-tables and notices and excursion and other bills. "The
conditions provided that excursion ticket holders should have no right of action against the company in respect

14
(1981) 2 All E.R. 524.
15
(1913) 1KB 41.

7
of any injury, however caused. The plaintiff stepped out of a train before it reached the platform and was
injured.
The trial judge left to the jury the question whether the defendants had taken reasonable steps to bring the
conditions to the notice of the plaintiff. The jury found that they had not but the judge, nevertheless, entered
judgment for the defendants. The Court of Appeal held that the judge was right. The Court thought that the
verdict of the jury was probably based on the fact that the passenger had to make a considerable search to find
the conditions; but that was no answer. Lord Hanworth MR said that anyone who took the ticket was
conscious that there were some conditions and it was obvious that the company did not provide for the price of
an excursion ticket what it provided for the usual fare. Having regard to the condition of education in this
country, it was irrelevant that the plaintiff could not read.

Conditions can be classified into two broad categories:

1. Express conditions: Express condition is a condition which has been expressly stated in the
terms of the contract failure of which will allow one party to either repudiate the contract in whole or
claim for damages. Implied conditions are those which have not been expressly stated but which the
law presumes to be so inherently a part of the contract that it need not be laid down in clear and
written terms but are to be understood by the parties. Conditions that are agreed to by the parties are
commonly referred to as express conditions. Express conditions are usually denoted by language
such as "if ", "on condition that ", "provided that ", "I the even that ", and "subject to" to
make an event a condition. But usually in a dispute it is the court which decides whether an
agreement makes an even a condition by the process of interpretation.
2. Implied conditions: If an agreement does not make an event a condition then the court may
supply a term that does so. Such conditions will be referred to as "implied" conditions, since a court
uses the process of implication to determine whether to supply a term that makes an event a condition
and what term to supply. The distinction between express and implied conditions is of practical
importance because the rule of strict compliance is limited to express conditions. The implied
condition can be seen in the above case of preist.16

Preist v. Last17
In this case the plaintiff, who had no knowledge of hot-water bottles, bought such a bottle from the
defendant who was a chemist. It was in the ordinary course of the defendant’s business to sell
hot-water bottles. The plaintiff asked whether the bottle he was shown would stand boiling water. He was told
16
Preist v. K.B. 1448.
17
(1903) 2 K.B. 148.

8
that it would not, but that it would stand hot water. He did not state the purpose for which the bottle was
required. In the event, the bottle was filled with hot water and used by the plaintiff’s wife for bodily
application to relieve cramp. On the fifth time of using, the bottle burst and the wife was severely
scalded. Evidence showed that the bottle was not fit for use as a hot-water bottle.
Held: the plaintiff was entitled to recover the expenses he had incurred in the treatment of his wife’s injuries
for the defendant’s breach of the implied condition of fitness in the Sale of Goods Act. The
plaintiff had relied on the defendant’s skill and judgment, and although he did not mention the
purpose for which he required the bottle, he had in fact used it for the usual and obvious purpose.

Warranty:
A warranty is a term of the contract which is collateral or subsidiary to the main purpose of the contract. It is
therefore not so vital as to affect a discharge of the contract. A breach of warranty only entitles the innocent
party to an action for damages; he cannot treat the contract as discharged.
A warranty is “stipulation collateral to the main purpose of the contract, the breach of which
gives rise to a claim for damages but not to the right to reject he goods and treat the contract s
repudiated”18 
 
The breach of a warranty entitles the aggrieved party to only claim and recover damages. However, the
aggrieved party cannot refuse from accepting the goods, or repudiate the contract. The breach of a warranty
does not cause any irreparable loss to the party.
In commercial and consumer transactions, a warranty is an obligation or guarantee that an article or service
sold is as factually stated or legally implied by the seller, and that often provides for a specific remedy such as
repair or replacement in the event the article or service fails to meet the warranty.
The breach of a warranty is not considered as a breach of condition. Warranty is of a minor and secondary
nature. A breach of warranty occurs when the promise is broken, i.e., a product is defective or not as should be
expected by a reasonable buyer.
In a contract for the sale of goods, a warranty, once breached, gives rise to a claim for damages, but not a right
to reject the goods sold and treat the contract as repudiated. A condition, however, is part of the root of the
contract and allows the injured party to rescind and/or seek damages. Warranties may be express or implied.
This can be seen in the above case.

Microbeads v Vinhurst Road Markings Ltd19

18
According to Sec 12(3)
19
(1975) ALL ER 529.

9
Prismo held a patent for a machine for making white lines on roads. The complete specification was published
in November 1970. It was entitled to institute proceedings for infringement in 1972, when the letters patent
were granted.
At the beginning of 1970, Vinhurst brought a machine for making white lines from Microbeads… property in
the machine passed before Nov 1970. Vinhurst knew nothing about the patent; it found the machine
unsatisfactory and didn’t pay Microbeads. Microbeads sued for the price. Vinhurst alleged
breach of the term of fitness for purpose, and claimed that Microbeads did not have the right to sell the
machine and Vinhurst did not have quiet possession.
Lord Denning found that because the sale had occurred prior to the grant of the patent, there was no breach of
the condition that the seller had the right to sell the goods. They were entitled to do whatever they liked with
them at the time. However, he found a breach of the implied warranty for quiet possession. He found
that the words “to have and enjoy” applied not only at the time of sale but for to future enjoyment.

When is a condition considered to be a warranty?

According to the Sale of Goods Act, a condition is taken as warranty for repudiation purpose under the
following:.
i. Where a contract of sale is subject to any condition to be 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 treating the contract as repudiated.
ii. 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.
iii. Nothing in this section shall affect the case of any condition or warranty fulfilment of which is
excused by law by reason of impossibility or otherwise.

Time of payment is not essence of contract but time of delivery of goods is, unless specified otherwise unless
a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed
to be of the essence of a contract of sale. Whether any other stipulation as to time is of the essence of the
contract or not depends on the terms of the contract. As a general rule, time of payment is not essence of
contract, unless there is specific different provision in Contract. In other words, time of payment
specified is ‘warranty’. If payment is not made in time, the seller can claim damages but cannot
repudiate the contract.

10
Stipulation of time and essence of contract:
a. When time is stipulated regarding the payment of price: Time of payment is not considered the
essence of the contract unless a different intention appears from the terms of the contract. Thus if
payment is not made in time the seller cannot avoid the contract but can claim damages.
b. When time is stipulated regarding delivery of goods: time of delivery of goods is normally considered
essence of the contract. Thus non-performance at stipulated time will render the contract voidable at
the option of the buyer.

Conditions v. Warranties
Stipulations that is essential for main purpose of contract. Non-fulfilment of such will mean loss of foundation
of contract. These are termed as ‘Conditions‘. Stipulations not essential are termed as ‘warranty‘.
Aggrieved
Party may claim damages.
The difference between conditions and warranties can be illustrated in two cases from the late 19thcentury. In
Poussard v Spiers and Pond20, Madame Poussard was under contract to appear in an operetta for the
season. In fact she was unavailable because of illness until one week after the season had started. It was held
that the obligation to perform from the first night was a condition and the producers were entitled to terminate
her contract. In Bettini v Gye21, Bettini was under contract to appear in concert for a season. The term
required him to be in London for rehearsals six days before the season started. When Bettini arrived three days
late, Gye refused to accept his services. It was held that Bettini‟s late arrival was simply a breach of a
warranty so Gye was himself in breach by terminating Bettini‟s contract.
A breach of a condition does not automatically cause a contract to be terminated, but it gives the innocent party
a choice about how to proceed. They may choose to cancel (“repudiate”) the contract and claim
damages and rescission, or they may choose to carry on with (“affirm”) the contract and claim
damages.
Let’s take another example. Tom, a self-employed sales representative, bought a new car for
£10,000.He paid a deposit of £5,000 and agreed to pay the balance in instalments. The first time Tom drove
the car the engine failed. The manufacturer was prepared to replace the engine, which was covered by its
guarantee.
It is an implied condition under Section 14 of the Sale of Goods Act 1979 that goods sold must be of a
“satisfactory quality”. This leaves Tom with two possible options on how he should legally proceed:

20
(1861) 1 QBD 410.
21
(1876) 1 QBD 183.

11
 a. He may repudiate the contract, and claim rescission and damages. Repudiation means that Tom is
no longer bound to make any payments on the car. Rescission enables him to recover his deposit of
£5,000 and any instalment payments. In addition, he may recover damages to compensate him for
any additional costs such as having the car towed to a garage, the cost of hiring a car or arranging
alternative transport.
b. He may accept the manufacturer’s promise to repair the car – in other words, he may
affirm the contract and recover damages only for example, compensation as under the first option. In
this option Tom has, in effect, chosen to treat the breach as one of warranty rather than that
of condition.

So what about warranty?

In this case, warranty is a relatively unimportant term. The innocent party is not entitled to repudiate a contract
simply for a Breach of a warranty and is restricted to a claim for damages. In fact, if the innocent party should
proceed by repudiating the contract following a breach of warranty, they are no longer innocent, but have
acted in breach of contract.22
Imagine, for example, that Tom discovered the car radio was faulty and needed to be replaced. This is a
relatively minor breach and entitles Tom to be compensated for the cost of a replacement radio. Tom would
not, however, be entitled to repudiate the contract to purchase the car.
Unfortunately, contracting parties do not always make it clear whether a particular term is a condition or a
warranty. This can create many problems but, in general, the law allows parties freedom of contract in that
they are free to classify terms as they choose. What may appear to be a minor issue to one person may be of
crucial importance to another. It is down to the courts therefore to determine the intention of the parties
involved.
Even where the parties use the word “condition” or “warranty” to describe a particular term, the
courts have stated that this will not in itself be conclusive. In Schuler AG v Wickman Machine Tools Sales
Ltd23 a term described as a “condition” required Wickman to make weekly visits over a four and- a-
half year period to six named firms, a total of 1,400 visits.
Wickman failed to make some of the weekly visits so Schuler terminated the contract. It was held that Schuler
acted in breach by repudiating the contract. Even though the word “condition” had been used to describe
the term, the House of Lords did not believe that it was the parties‟ intention that a failure to make a
single visit would give Schuler the right to terminate.

22
See Bettini v. Gye (1876) 1 QBD 183
23
(1974) A.C. 235.

12
Conditions:
a. Breach gives rise to rescind; with the rescission buyer can demand a return of the purchase money,
unless he has, with knowledge of the facts, held on to the bargain so as to waive the condition.
b. Right to sell; not undertake to give good title; seller still in breach even if transaction comes within an
exception to name that and buyer is able to get a goods title.
c. For Sale Of Good s.14, buyer not deprived of right to get back purchase money because cannot
restore goods which, from the nature of the transaction, are not the goods of the seller at all, and which
the seller therefore has no right to under any circumstances.24
d. Ground: total failure of consideration; not matter car used before found out condition breached.25

Warranties:
a. Breach gives rise to remedy in damages and will not be able to reject the goods.
b. S.14 (1) (b) and 14(2) (b) – irrelevant that seller not know of encumbrance or charge.
c. Still breached where encumbrances or charges arise after sale and passing of property; condition as to
title not breached but warranty as to quiet possession and free from encumbrances or charges
breached.26
d. Scope of right to quiet possession:.
i) Breach where buyer’s possession disturbed by lawful act of 3p who asserts a
superior title or a right which impairs the buyer’s title or his freedom to possess
and use the good.
ii) Breach where tort committed by seller himself or his agents.
iii) Not breach where stranger who has no connection with seller commits a tort which interferes
with buyer’s rights.

24
See Rowland v Divali (1923) All ER Rep 270.
25
See Rowland v Divali (1923) All ER Rep 270.
26
See Microbeads v. Vinhurst Road Markings Ltd. (1975) 1 All ER 529.

13
Conclusion:
After the successful completion of this research I have acquainted myself regarding the sale of goods act and
the difference between the conditions and warranties. I have learned how a contract of sale of goods is
essential for the smooth operations and exchange of goods in the economy. It is always preferred to have
written contract as it serves as proof in legal proceedings. A written and attested contract ensures quality of the
subject matter. The Seller, thus is duty-bound to warrant that the goods are merchantable, conforms to Industry
Standards and specifications. It prevents fraud and deception on behalf of the subject-matter of price by either
of the parties. It assigns specific responsibilities upon the buyer and seller which they are bound to perform.
The Buyer has a responsibility to reasonably examine goods prior to acceptance and to notify the seller of any
defect of the goods–hence it make a buyer more aware of what s/he is buying, thus preventing flaw. A written
contract ensures transfer of ownership of the goods to the buyer. The seller through the contract warrants that
the goods are free from any security interest liens, outstanding titles, claims or any other outstanding
encumbrances. A contract ensures authenticity of the two parties involved in the exchange. It also serves as a
proof of a legal transaction and prevents the selling party to make an unlawful mark-up on any product sold. In
a nutshell, a contract binds and well as benefits both the parties in the contract.
Every kind of contract includes some specifics terms or stipulations regarding the goods of exchange, the price
to be paid, buyers or sellers, the quality of goods, delivery, time of payment and performance etc.
Some stipulations are essential for the main purpose of the contract. These go to the root of contract and non-
fulfilment will mean loss to the foundation of the contract. These are major contracts called ’Conditions’.
Some stipulations are collateral to contract of sale of goods. These are the minor stipulations of as called,
warranty. Stipulations that is essential for main purpose of contract. Non-fulfilment of such will mean
loss of foundation of contract. These are termed as ‘Conditions’. Stipulations not essential are
termed as ‘warranty’. As there are usually different remedies if a warranty is breached, compared to if a
condition is breached, it's important to tell the difference between warranties and conditions in the contract?
Sometimes the contract will just state whether a term is a condition or a warranty.
If it doesn't say, it will come down to interpretation of the contract, based on the intention of the parties at the
time of forming their contract.
Bettini v Gye27 - conditions go 'to the root of' a contract (e.g. in a contract for a shipment where time is stated
to be 'of the essence', a term stating the deadline for shipment would probably be a condition)
27
(1876) 1QBD 183

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Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha28 - innominate/intermediate terms
-consequences of breach only known after breach has occurred etc. so status of a term assessed in light of
this. Every contract of sale is likely to contain a number of terms and stipulations about the nature and quality
of the goods and their fitness of the buyer's purpose. Every such term is not likely to be of equal importance.
Some of them constitute the hard core of the contract and their non-fulfilments may seem to upset the very
basis of the contract. They may be so vital to the contract that their breach may seem to be a breach of the
contract as a whole. Such terms are known as conditions. A term which is not of such vital importance is
known as a warranty. Its breach does not lead to repudiation, but only to damages for breach. The section 12 of
the sale of goods act goes on to explain the distinction between condition and warranties and also when should
condition to be treated as warranty.

28
(1962) 2 QB 26.

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BIBOLOGRAPHY:
1) K. Ramamoorthy, Pollock & Mulla The Sale of Goods Act (7th ed., 2007)
2) V. Krishnamachari and Surender K. Gogia, T.S. Venkatesa Iyer‟s Sale of Goods Act,
1930(8th ed., 2002)
3) The modern law of contract, Richard Stone.
4) The Modern Law Review, Vol. 15, No. 4 (Oct., 1952), Blackwell Publishing on behalf of the
Modern Law Review.
5) The Indian sale of goods act, 1930.
6) http://www.e-lawresources.co.uk .
7) http://chestofbooks.com/business/law/Handbook-Of-The-Law-Of-Sale-Of-Goods/55-Implied-
Conditions-And-Warranties.html
8) http://chestofbooks.com/business/law/Handbook-Of-The-Law-Of-Sale-Of-Goods/54-Remedies-
For-Breach-Of-Condition-And-Breach-Of-Warranty.html
9) http://chestofbooks.com/business/law/Handbook-Of-The-Law-Of-Sale-Of-Goods/55-Implied-
Conditions-And-Warranties.html
10) http://www.legalservicesindia.com/articles/condi.htm
11) http://www.jstor.org/stable/1090929
12) http://www.lawteacher.net/ 
13) http://www.1911encyclopedia.org/Main_Page
14) http://www.lawofcontract.co.uk/
15) www.paclii.org
16) Conditions and Warranties in the Sale of Goods, Francis M. Burdick, Columbia Law Review
Association, Inc.

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