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Terms may be conditions or warranties Contracts will always contain different types of terms (said or written), some more

important than others. The more important terms are called "conditions", the less important terms are called "warranties". Conditions are so important that without them one or other of the parties would not enter into the contract. Consequently, to make a condition falsely, or to breach a condition, is viewed so seriously that the wronged party will be entitled to treat the contract as void, voidable or at least rescinded. Where the term is a warranty, the wronged party will only be able to seek monetary damages for any loss suffered. The contract itself will remain binding on both parties. The court looks at each case on its own merits. In making a decision as to whether a term is a condition or a warranty, the court will consider all the surrounding circumstances, including the seriousness of the consequences if the contract is held to be non-binding, and the intentions of the parties at the time they made the contract. Just because a term is described in the contract or by the parties as a condition or warranty does not necessarily mean that it will be regarded as such by the court. The law of contract has been significantly affected by many Acts of Parliament to protect consumers. No longer can the common law of contract be looked at to discover all the terms of a contract and whether those terms are conditions or warranties. There are various Acts of Parliament that provide for minimum standards of trade behaviour and the standard of quality that the consumer ought to be able to expect. (For discussion of these extra factors, see: Chapters 12*2 Consumer Guarantees, and 12*3 Consumer Protection Legislation.)

54. Remedies For Breach Of Condition And Breach Of Warranty


As has already appeared (52), in the case of a breach of warranty, the injured party is entitled to damages, whereas in the case of a breach of condition, he has the alternative of treating the contract as being completely broken by non-performance. The fact that the buyer has resold the goods does not necessarily preclude him from exercising his right to reject them for breach of condition if the inspection and rejection take place within a reasonable time. Niagara Grain Co. v. Reno, 1916, 38 O.L.R. 159, 32 D.L.R. 576; as to the buyer's right of infection, see chapter* 6, 66. The injured party may, however, elect to treat a breach of condition as merely a breach of warranty.

The Sale of Goods Act (Ont. s. 13; U.K. s. 11) provides: 13-(1) Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of such condition as a breach of warranty, and not as a ground for treating the contract as repudiated. In this section the word "or" must be read as a conjunction co-ordinating two phrases which are equivalent one to the other. The meaning seems reasonably plain, namely, that the injured party, instead of insisting on his right to be discharged on account of the other party's breach of condition, and to reject the goods, may waive this right, that is, may content himself with his right of action for damages as on a breach of warranty. Ewart (Waiver Distributed, pp. 148-150) criticizes the wording of the section on the ground that it seems to allow an alternative between waiving the condition (that is treating the condition as non-existent) and treating the breach of condition as a breach of warranty, and doubtless the section would be improved if the word "and" were substituted for "or," or if the words "may waive the condition or" were omitted. Under a contract for the sale of goods to be delivered within a certain period of time. the buyer's right to require delivery within that period may be waived even after that period has expired; but it would seem that where the contract is within the Statute of Frauds (Sale of Goods Act, Ont. s. 6; U. K. s. 4), the waiver must be evidenced by writing. Hartley v. Hymans, [1920] 3 K.B. 475 (cases reviewed). In two cases the injured party may be obliged to treat a breach of condition as a breach of warranty. The Sale of Goods Act (Ont. s. 13; U. K. s. 11) provides: 13. - (3) Where a contract of sale is not severable, and the buyer has accepted the goods, or part thereof, or where the contract is for specific goods, the property in which has passed to the buyer, 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 be-a term of the contract express or implied, to that effect. (4) Nothing in this section shall affect the case of any condition or warranty, fulfillment of which is excused by law by reason of impossibility or otherwise. The statute does not say that what was originally a condition is really degraded or converted into a warranty in either of the two cases mentioned, but merely that the buyer is limited to the remedies available for breach of warranty. Therefore, it a contract contains a stipulation that " sellers give no Warranty expressed or implied as to growth, description or any other matters," this stipulation does not prevent the buyers from suing for damages for the breach of condition. even though the buyers have accepted the goods and are consequently obliged to treat the breach o condition as a breach of warranty. Wallis v. Pratt, [1911] A.C.394, [1910] 2 K.B. 1003, Fletcher Moulton L.J., at p. 1015; cf. Merrill v. Waddell, 1920, 47 O.L.R, 572, 54 D.L.R. 18 (retention and re-sale of goods by buyer). The statute mentions two cases in which a buyer may be limited to his remedy as on a breach of warranty, but does not necessarily exclude the possibility that a buyer may in

some other way preclude himself from taking advantage of the choice of remedies ordinarily given for breach of condition. Wallis v. Pratt, [1910] 2 K.B. 1003, at p. 1013. The question when the property in goods passes from the seller to the buyer is discussed in chapter 3. As to the effect of the passing of the property upon the buyer's remedies in case of breach of condition, see Armand v. Noonan, 1918, 41 O.L.R. 551, 41 D.L.R. 433; Hallam v. Bainton, 1919, 45 O.L. R. 483, 48 D.L.R. 120, S.C. sub nom. Bainton v. Hallam, 1920, 60 Can. S.C.R. 325, 54 D.L.R. 537. The remedies for breach of warranty, (including the cases in which the buyer elects or is compelled to treat a breach of condition as a breach of warranty), are defined in ;he Sale of Goods Act (int. s. 52; U. K. s. 53) as follows: 52 - (1) Where there is a breach of warranty by the seller, or where the buyer elects, or is compelled, to treat any breach of condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods, but he may (a) 1 set up against the seller the breach of warranty in diminution or extinction of the price; or (b) maintain an action against the seller for damages for the breach of warranty. (2) The measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course ofi events, from the breach of warranty. (3) In the case of breach of warranty of quality such loss is prima facie he difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty. (4) The fact that the buyer has set up the breach of warranty in diminution or extinction of the price does not prevent him from maintaining an action for the same breach of warranty if he has suffered further damage. In the United Kingdom it is further provided: 53. - (5) Nothing in this section shall prejudice or affect the buyer's right of rejection in Scotland as declared by this Act. The question as to the measure of damages is discussed in chapter 8, 85. As has been pointed out in 52, the use of the terms "condition" and "warranty" in the Uniform Sales Act in the United States is different from their use in the Sale of Goods Act. In the former statute the term " warranty" includes both the warranty and the (promissory) condition of the latter statute, and the remedies allowed for breach of warranty under the former statute are correspondingly wider. The term "condition" is used in a comparatively narrow sense in the Uniform Sales Act. In the United States the Uniform Sales Act provides:

11. - (1) Where the obligation of either party to a contract to sell or a sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or sale or he may waive performance of the condition. If the other party has promised that the condition should happen, or be performed, such first mentioned party may also treat the non-performance of the condition as a breach of warranty. (2) Where the property in the goods has not passed, the buyer may treat the fulfillment by the seller of his obligation to furnish goods as described and as warranted expresslyor by implication in the contract to sell as a condition of the obligation of the buyer to perform his promise to accept and pay for the goods. 12. Any affirmation of fact or my promise by the seller relating to the goods is an express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the goods, and if the buyer purchases the goods relying thereon. No affirmation of the value of the goods, nor any statement purporting to be a statement of the seller's opinion only shall be construed as a war ranty. 69. - (1) Where there is a breach of warranty by the seller the buyer may, at his election (a) Accept or keep the goods and set up against the seller the breach of warranty by way of recoupment in diminution or extinction of the price; (b) Accept or keep the goods and maintain an action against the seller for damages for the breach of warranty; (c) Refuse to accept the goods, if the property therein has not passed, and maintain an action against the seller for damages for the breach of warranty; (d) Rescind the contract to sell or the sale and refuse to receive the goods, or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid; (2) When the buyer has claimed and been granted a remedy in any one of these ways, no other remedy can thereafter be granted . (3) Where the goods have been delivered to the buyer, he cannot rescind the sale if he knew of the breach of warranty when he accepted the goods, or if he fails to notify the seller within a reasonable time of the election to rescind, or if he fails to return or to offer to return the goods to the seller in substantially as good condition as they were at the time the property was transferred to the buyer. But if deterioration or injury of the goods is due to the breach of warranty such deterioration or injury shall not prevent the buyer from returning or offering to return the goods to the seller and rescinding the sale. (4) Where the buyer is entitled to rescind the sale and elects to do so, the buyer shall cease to be liable for the price upon returning or offering to return the goods. If the price or any part thereof has already been paid, the seller shall be liable to repay so much thereof as has been paid, concurrently with the return of the goods, or immediately after an offer to return the goods in exchange for repayment of the price.

(5) Where the buyer is entitled to rescind the sale and elects to do so, if the seller refuses to accept an offer of the buyer to return the goods, the buyer shall thereafter be deemed to hold the goods as bailee for the seller, but subject to a lien to secure the repayment of any portion of the price which has been paid, and with the remedies for the enforcement of such lien allowed to an unpaid seller by section 53. (6) The measure of damages for breach of warranty is the loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty. (7) In the case of breach of warranty of quality, such loss, in the absence of special circumstances showing proximate damage of a greater amount, is the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty.

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The Court in this case went at length to properly define the terms condition and warranty and how the two terms have particularly different outcomes in the context of contract and real estate law. The Court held that a condition is a term which is essential to the contract whereas a warranty is subsidiary or collateral to the contract. Essential to the contract means that it goes to the root of the contract meaning that the contract would not have been achieved otherwise. A breach of warranty does not entitle a purchaser to rescind the contract, the purchaser is required to complete the transaction and sue for damages that resulted from the breach of the warranty. Conversely, if a condition is breached, the innocent party is entitled to rescind the contract and get their deposit back or if they wish, complete the transaction and sue for damages. Further, whether a term is labeled as a condition or warranty is not determinative and the courts will look at the overall construction of the contract and intention of the parties