CONDITIONS & WARRANTIES

CONDITIONS AND WARRANTIES

• INTRODUCTION:

A contract of sale of goods contains various terms or stipulations regarding the

quality, the price, the mode of payment, the delivery of goods, the time of

performance and the place where the goods are to be sent etc.

Some of these stipulations may be major terms, while others  may be minor terms.

The major terms are called conditions and the minor terms are called warranties 
 DEFINITION OF CONDITION AND WARRANTIES
• CONDITION:
Section 12 (2) says, 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.

In other words, a condition is essential for the main purpose of the contract. Its non-fulfillment causes

irreparable loss to the aggrieved party. In case of violation of condition, the aggrieved party can cancel the

contract. 

• Example:
Asif contract to 100 Honda CD-70 bikes to Basit, But he delivered Star CD-70 bikes. It is a breach of

condition. Basit can reject or accept them & claim damages.

 DEFINITION OF CONDITION AND WARRANTIES
• WARRANTY:

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 right to reject the goods & treat the contract as repudiated. Section 12(3)

In other words, a warranty is not essential for the main purpose of the contract. The breach of warranty

gives the injured party a right to recover damages only but not to reject the contract.

• Example:

Aniq promises to deliver to Bushra 100 irons at her showroom. But he delivered them at her home. It is a

breach of warranty. Bushra can claim damages only.

 CONDITIONS TREATED AS WARRANTY
A breach of condition is treated as a breach of warranty under the following cases:

1. Option of Buyer:

The breach of condition by the seller gives the right to the buyer to reject the goods, but he is not

bound to do so. He may treat the breach of condition as a breach of warranty and accept the goods

and claim the damages. [Section 13(1)]

Example:

Asif agrees to supply, Dawood crystal shape quality sugar, but he supplied crush quality sugar.

Dawood can reject it. Dawood may accept the crush quality sugar & claim damages
 CONDITIONS TREATED AS WARRANTY
A breach of condition is treated as a breach of warranty under the following cases:

2. Acceptance Of Goods By Buyer:

When the buyer has accepted the goods, he cannot reject them but can claim damages. If the buyer has accepted only part

of the goods and the contract is indivisible, he will have to accept the remaining part also. But in divisible contract, he can reject

the remaining goods, if he has accepted only part thereof. [Section 13(2)]

Example:

Junaid contracted to sell to Raju horns. The horns were delivered in 19 boxes by installments. Raju accepted one box and

rejected others being dented. Junaid sued for the price for all horns.

Held that Raju could reject. (Jackson versus Rotax Motor Car Company)
 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES

Conditions and warranties may be express or implied. The conditions

and warranties which are included in contract are called express. The

conditions and warranties which are not included in the contact but the

law presumes their existence in the contract are called implied.

 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES

IMPLIED CONDITIONS:
Unless otherwise agreed, the law includes the following 08 conditions in a contract of sale of goods.
1. Condition As To Title:
It is implied condition that in a sale the seller has a right to sell goods, and in an agreement to sell, he will have a right to sell
the goods at the time when the ownership is to pass. The seller has the right to sell the goods as the owner or as owner’s
agent. Thus, if the seller’s title proves to be defective, the buyer can reject the goods and recover his price. [Section 14 (a)]

Example:
Ashok purchased a car from Bina. After few months the car is seized by the police as a stolen one. Ashok can recover the

price from Bina. 

 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES

IMPLIED CONDITIONS:

2. Sale By Description:
 In a contract of sale of goods by description; it is an implied condition that the goods shall correspond with the
description. If the goods are not according to the description, the buyer can reject the good. In a sale of by description, the
seller cannot perform the contract by supplying other thing. A buyer is not bound to accept such goods. (Section 15)

Example:
Anila advertised a car for sale as Corolla 2016 model Nausheen after buying the car, found it of an earlier model.

Nausheen could recover the car

 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES

3. Sale by Sample:
 In case of sale by sample, the goods must be supplied according to a sample agreed upon. In this case the
following are implied conditions (Section 17) 
a. The bulk shall correspond with the sample in quality.
b. The buyer shall have reasonable opportunity of comparing the bulk with the sample.
c. The goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on
reasonable examination of the sample.

Example:
  The buyer examined the bulk after a week, Two parcels of wheat were sold by sample. The seller showed
one parcel to buyer but refused to show the other.
Held that the buyer could cancel the contract. (Lorymer Versus Smith)
 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES

4. Sale by Sample As Well As By Description:

When the goods are sold by sample as well as bad description, there is an implied condition that the bulk of

the goods shall correspond with the sample and the description. If the goods supplied correspond only with the
sample and not with the description or vice- versa, the buyer can reject the goods. (Section 15)

Example:
   Noman agreed to sell Ghaffar foreign refined rape oil. The oil supplied corresponded with the sample, but
was mixed with hemp oil. Held, that the oil was not in accordance with the description, so the buyer could
reject. (Nichol versus Godts)
 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES
5. Condition As To Fitness or Quality:
It is not implied condition that the goods supplied by seller should be fit for the purposes. Where the buyer
informs to the seller about the particular purpose for which the goods are required, there is an implied condition
that the good shall be reasonably fit for such purpose. This condition applies if the following requirements are
satisfied:
a. The buyer should inform the seller about the purpose of the goods.

b. The buyer should rely on the sellers’ skills and judgment.

c. The seller’s business must be to sell goods of that type. [Section 16(1)]

Example:

 Kumar enters into an agreement with Rabia to buy 100 oil filters to be used for Toyota cars. The oil filters were unfit.

Kumar can reject them.

 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES
6. Condition As To Merchantability:

The term merchantable means that the goods must be fit for the ordinary purpose for which such goods are

used. It include state or condition of the goods. Where goods are bought by description from seller or producer

or not, there is implied condition that the goods shall be of merchantable quality. The goods must be free from

hidden defects. This condition applies if the following requirements are satisfied. [Section 16(2)].

i. The goods must be bought by description

ii. The goods must be bought from seller who deals in such goods.

  Example:

Jameel purchased a black yarn from Kumar, Jameel a dealer in yarn, and finds it damaged by aunts. It is a

breach of condition. Jameel can reject it. 

 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES
7. Condition by Custom:
An implied condition as to quality or quality for a particular purpose may be annexed by the
usage of trade. In some cases, the purpose of which the goods are required may be ascertained from
the acts and conduct of the parties to the sale, or from the nature of description of the article
purchased. (Section 16 (3)]
Example:
Sumaira sold drugs by auction to Yawar. In a sale by auction there was a custom to declare any
damage in the goods. Goods were sold without declaration. Goods were found damaged.
Held, Yawar could reject the goods.
 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES

8. Condition As To Wholesomeness:
Wholesomeness means beneficial for health. This condition applies only in
contract of sale of eatables and provisions. In such cases good supplied must be
merchantable and wholesome. It means that the goods must be fit for consumption.

Example:
Ayesha bought milk from Baber, a dairy owner. The milk contained germs of
typhoid fever. Aysha’s husband, on taking the milk, became infected and died.
Babar was held liable in damages (Frost versus Ayles Bury Dairy Co. Limited)
 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES
IMPLIED WARRANTIES:

Unless otherwise agreed, the law includes the following 04 warranties into a contract of sale of goods:

1. Quite Possession:

It is an implied assurance to the buyer that, he shall have the possession and enjoyment of the goods sold to

him without disturbance without the seller or any other person. If the buyer is disturbed in the enjoyment of the

goods due to the seller's defective title, he can claim damages from the seller. [Section 14 (b)]

Example:

Mahesh purchase a second hand laptop from Adnan. Mahesh spent some money on its repair and used it for

some months. The laptop was found to be stolen and Mahesh had to return it to true owner. Held, Mahesh could

recover damages and price. (Mason versus Burningham)

 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES
2. Freedom From Encumbrances:
It is implied warranty on the part of seller that, the good shall be free from encumbrances in
favor of any third party. The warranty will not apply where such encumbrances are declared to the
buyer when the contract is made. If the possession of the buyer is disturbed due to such charge in
favor of third party, he can claim damages. [Section (14(c)]  
Example:
Zehra pledges her car with Bobby and promises to give its possession the next day. Zehra sells
her car to Mehtab, Bobby ask Mehtab about the pledge affairs. Mehtab pays the amount of pledge to
Bobby. Mehtab can recover compensation from Zehra
 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES

3. Usage of Trade:

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

annexed by the usage of trade [Section 16(3)]

Example:

Amma Tower market offers to pay damages on the fading of color of toys. Every
seller of toys of that market is bound by this warranty.
 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES
4. Disclosure Of Dangerous Goods:

The implied warranty on the part of the seller is that if the goods are of dangerous nature he will warn the

ignorant buyer about the probable danger. In case of breach of this warranty, the buyer is entitled to claim

compensation for the injury caused to him.

Example:

Rashid purchased a tin of disinfectant powder from Ajay. Ajay knew that if tin not opened with special care,

it may be dangerous, but told nothing to Rashid. Ajay opened the tin in the normal way and as a result the

powder flied into his eyes and cause injury.

Held, Ajay was liable. (Clarke versus Army & Navy Coop Limited)
THANK YOU 