CONDITIONS

AND WARRANTIES
SECTION 11-17
Stipulations with Reference to Goods

CONDITION WARRANTY

ESSENTIAL TO COLLATERAL TO
THE MAIN THE MAIN
PURPOSE OF PURPOSE OF
THE CONTRACT THE Contract

BREACH-
Breach- Claim for
REPUDIATION
damages
OF CONTRACT
Condition or Warranty S 12
◦ Condition and warranty—
◦ (1) A stipulation in a contract of sale with reference to goods which are the subject
thereof may be a condition or a warranty.
◦ (2) 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.
◦ (3) 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
◦ (4) 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.
Condition or Warranty
◦ In a contract of sale of goods there may be various terms, such terms may be
either conditions or warranties.
◦ If the term is essential for the main purpose of the contract then according to S
12(2), it is a condition and in case of breach of such condition the party who is
not at fault has the right to repudiate the contract.
◦ Whereas on the other hand if the term's not essential, it is collateral to the main
purpose then according to S 12(3) it is a warranty. And in case of breach
of warranty the party who is not at fault has the right to claim damages but not
to repudiate the contract.
Condition or Warranty
◦ Like any other contract, a contract of sale of goods may have various terms or
stipulations. Such stipulations, depending on their effect have been termed
either conditions or warranties under the Act. Section 12 of the Act deals with
“Condition and warranty”.
◦ Sub- section (1) states that a stipulation in a contract of sale with reference to
goods which are the subject thereof may be a condition or a warranty. Sub-
section (2) further explains that 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.
Example
◦ Eg In a contract between Mohammed Asim and Anantkumar Foods, Asim
contracted to deliver 100 kgs of potatoes. However, what was actually
delivered were onions. This failure on the part of Asim is not merely a breach
of one of the terms of the contract, but in fact, it was a total failure on his part
to perform the contract. Hence, the requirement to deliver potatoes was
“essential” to the main purpose of the contract and was therefore a condition.
Thus, in the given case, Anantkumar Foods has a right to treat the contract as
repudiated on the basis of the breach of 'condition'.
Warranty

◦ A warranty, on the other hand, as explained under sub-section (3) 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. Thus, a
warranty is a stipulation that is not essential to the main purpose of
the contract but is only of secondary importance.
Example
◦ For Example: The newly formed Bilkis Transport Company Limited placed an
order with M/s Super Motors for the purchase of three cargo trucks. The
money for the same was paid in advance. The company was assured by Super
Motors that the trucks will be delivered within 30 days. Accordingly, the
company accepted orders for transporting material after a month. However, the
trucks were delayed by more than a month. This resulted in a loss of business
to the company. In an action filed against Super Motors, the company was
successful in prosecuting its claim for damages.
Example
◦ Consider another example where a lady orders for a red sari, it being agreed
between her and the seller that it will be sent by a registered parcel, and that
she will pay the price by 15th January, the day of her marriage. In this
illustration, the stipulations regarding the colour of the sari as well as the date
of supply are essential to the main purpose of the contract and are conditions
whereas stipulations regarding the time of payment of the price and the mode
of dispatch of the goods are not essential to the main purpose of the contract
and are only collateral, they are warranties.
Condition or Warranty

◦ Sub-section (4) further provides that 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 in a contract is a
condition or warranty or neither, depends upon the construction of
the contract in each case. Dudhia Forest Co-op. Labourers &
Artisans Co. Ltd. V. Mohammed Saiyed & Abdul Rehman‟s Ci.
1980
Example
◦ For example, A agrees to supply a suit to B by 15th November, which the latter
wants to wear on the day of his marriage to be held on 16th November, the
time of the delivery of the suit is a condition. On the other hand, if the suit
which A agrees to deliver to B by 15th November is required by the buyer to
be used in the following winter season, the time of delivery is a warranty. The
court has to look to the intention of the parties by referring to the terms of the
contract and the surrounding circumstances to judge whether a stipulation is a
condition or a warranty. A stipulation may be a condition, though called a
warranty in the contract.
Stipulations as to time – S 11
◦ Stipulations as to time
◦ 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.
Stipulations as to time
◦ As regard time for the payment of price, unless a different intention appears
from the terms of contract, stipulation as regard this, is not deemed to be of the
essence of a contract of sale. But delivery of goods must be made without
delay. Whether or not such a stipulation is of the essence of a contract depends
on the terms agreed upon. Price for goods may be fixed by the contract or may
be agreed to be fixed later on in a specific manner. Stipulations as to time of
delivery are usually the essence of the contract.
Stipulations as to time
◦ Clearly, the general rule stated in Section 11 is that the time of payment of the price is not
deemed to be of the essence of the contract. Therefore, if the buyer makes a delay in the
payment of the price, the seller cannot avoid the contract on that account but he can only claim
compensation for the same. American Pipe Co. v. State of U.P. AIR 1983
◦ The parties are, however, free to express a different intention in their contract. They may make
the time of the payment of the price as the essence of the contract. Where the time is of the
essence of the contract and the same has been extended, the extended date is also of the
essence of the contract. Orissa Textile Mills Ltd. V. Ganesh das AIR 1961
Stipulations as to time
◦ Where the time for the performance of the contract has not been agreed to under the contract,
one of the parties cannot unilaterally fix the same as being of the essence of the contract, and
therefore repudiate the contract on non-performance at the time so fixed. National Coop.
Sugar Mills Ltd. V. Albert & Co. 1981
◦ Whether any other stipulation as to time is of the essence of the contract or not depends on the
terms of the contract. In the case of a contract of supply of human albumin within one year
commencing from a particular month, time can be said to be of essence. Andard Mount,
London, Ltd. V. Curewell India Ltd. AIR 1985
CONDITIONS
AND
WARRANTIES

Conditions and Warranties

Conditions and Warranties

◦ 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 goods and about their fitness for buyer's purpose.
when these statements or representations do not form a part of the contract of sale, they are not
relevant and have no legal effects on the contract. But when these form part of the contract of
sale and the buyer relies upon them, they are relevant and have legal effects on the contract.
◦ A representation which forms a part of the contract of sale and affects the contract is called a
stipulation. However, every stipulation is not of equal importance.
Condition and warranty S 12
◦ Condition and warranty—
◦ (1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or
a warranty.
◦ (2) 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.
◦ (3) 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.
◦ (4) 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.
Consequences of the breach of a Condition or
a Warranty
◦ Consequences of the breach of a Condition or a Warranty
◦ Section 12 (2) states that the breach of a condition by one party entitles the other to treat the
contract as repudiated. This is so because a condition is a stipulation essential to the main
purpose of the contract.
◦ Consider again the example of a lady ordering for a sari. Say she orders for a red sari asking
the seller to deliver it by 15th January so that she can wear it on 16th on the occasion of her
wedding but the seller instead supplies a black sari in place of a red sari or supplies the sari on
18th January, there is a breach of condition; the lady buyer can treat the contract as repudiated.
Consequences of the breach of a Condition or
a Warranty
◦ Section 12 (3), on the other hand, states that upon the breach of a warranty by
one party, the other party is entitled to claim damages rather than avoiding the
contract. Thus, for example, the buyer agrees to pay the price in advance by
15th December, and the goods are to be delivered on 15th January, but the
buyer makes payment late, say on 25th December, the seller's remedy in such a
case is to claim compensation, because, according to sec. 11, the time of
payment of price is generally deemed to be a warranty.
Examples
◦ Ram consults shyam, a motor car dealer for a car suitable for touring purposes to promote the sale of his
product. Shyam suggests "maruti' and ram accordingly buys it from shyam. The car turns out to be unfit
for touring purposes. Here the term that the 'car should be suitable for touring purposes' is a condition of
the contract. It is so vital that its non-fulfillment defeats the very purpose for which ram purchases the
car. Ram is therefore entitled to reject the car and have refund of the price.
◦ Let us assume Ram buys a new maruti car from the show room and the car is guaranteed against any
manufacturing defect under normal usage for a period of one year from the date of original purchase and
in the event of any manufacturing defect there is a warranty for the replacement of defective part if it
cannot be properly repaired. After six months ram finds that the horn of the car is not working. Here in
this case he cannot terminate the contract. The manufacturer can either get it repaired or replaced it with
a new horn. Ram gets a right to claim for damages, if any suffered by him but not the right
of repudiation.
When condition to be treated as warranty S
13
◦ When condition to be treated as warranty.—
◦ (1) 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.
◦ (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 fulfilment of which is excused by law by
reason of impossibility or otherwise.
Breach of Condition by the Seller/Rights of Buyer in case of
breach of condition/option in case of breach of condition to the
Buyer
◦ Breach of Condition by the Seller; Recourses of the Buyer
◦ Where a condition in a contract of sale has been breached by the seller, the buyer has been
given the option under the Act to any of the following recourses:
◦ i. He may treat the contract as repudiated;(S 12(2) or
◦ ii. He may waive that condition altogether;(S 13(1) or
◦ iii. He may elect to treat the breach of the condition as a breach of warranty and not as a
ground for treating the contract as repudiated.(S 13(1)
◦ iv. Performance may be excused by impossibility S 13(3)
Breach of Condition by the Seller/Rights of
buyer on breach of condition
◦ To waiver off the condition S 13(1)
◦ Generally, the buyer remedy is to reject the goods but when buyer waives the condition and he
accepts the goods without bringing an action against the seller in such cases the condition is
deemed to be waived. And in such cases, he can't later on repudiate the contract or claim the
damages.
◦ Ordinarily, the buyer's remedy, on a breach of condition by the seller, is treating the contract as
repudiated and rejecting the goods. However, the buyer is not bound to exercise this right. If
the buyer so likes, he may elect to give up his right of rejecting the goods and waive the
condition altogether. In such a case, the erstwhile condition will be deemed to be nonexistent.
So, by exercising the option of waiving the condition altogether, the buyer accepts the
goods without bringing any action against the seller.
Breach of Condition by the Seller
◦ Treat breach of condition as breach of warranty S 13(1)
◦ In such a case buyer accepts the goods instead of rejecting them and can claim damages as there was a breach of
warranty only.
◦ Although on breach of condition by seller the buyer has a right to reject the goods but he is not bound to exercise these
rights.
◦ Thus, another option open to the buyer is to treat the breach of condition as a breach of warranty and thereby have a
smaller remedy of claiming compensation. In such a case, he accepts the goods instead of rejecting them and can claim
damages as if there was a breach of warranty only. For example, A agrees to supply B 1000 bags of first quality wheat,
at the rate of Rs. 100/- per bag but instead supplies only second quality wheat, the price of which is Rs. 90/- per bag.
This is a breach of condition by the seller and the buyer can reject the goods, but if the buyer so likes, he may treat it as
a breach of warranty, accept the second quality wheat and claim compensation at the rate of Rs. 10/- per bag.
Breach of Condition by the Seller
◦ Compulsorily condition is converted into warranty S 13(2)
◦ When conditions and warranties are so mixed that they can't be separated then in such a case that breach
of condition is to be treated as breach of warranty.
◦ Reason
◦ When a buyer has choice of either accepting or rejecting the goods and he choose to accept then his right
of rejection can no more be exercised.
◦ Section 13 (2) lays down that in the case of a contract of sale which is not severable, and the buyer has
accepted the goods or part thereof, the only option available to the buyer is to treat the breach of
condition 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.
Breach of Condition by the Seller
◦ The idea behind the provision is that when the buyer has a choice of either accepting or rejecting goods
and he chooses to accept them, his right of rejection can no more be exercised. Mere taking delivery of
the goods by the buyer does not necessarily mean the acceptance of them.
◦ . According to Section 42, the buyer is deemed to have accepted the goods:
◦ i. When he intimates to the seller that he has accepted them; or
◦ ii. When the goods have been delivered to him and he does an act in relation to them which is
inconsistent with the ownership of the seller, for example, on receiving a watch sent by the seller, he
pledges it, sells it or starts using the same; or
◦ iii. When, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he
has rejected them.
Breach of Condition by the Seller
◦ Performance may be excused by impossibility S 13(3)
◦ If due to impossibility or otherwise the fulfillment of condition or warranty is excused by law,
then there is no liability for the performance of such condition or warranty. Eg sale of Liquor
etc
◦ There may be cases where due to impossibility or otherwise, the fulfilment of a condition or
warranty is excused by law. In such a case, there is no liability for the non-performance of the
condition or the warranty, as the case may be.
◦ Reference may also be made to section 56, Indian Contract Act, for impossibility of
performance and sections 62-67, Indian Contract Act, regarding contracts which need not be
performed.
 Waiver of Conditions

• Non-
• Waives
severability of
performance
contract
Voluntary of contract Compulsory • Fulfilment of
Condition • Elect to treat Condition
conditions
condition as
excused by
warranty
law
Breach of Condition by the Seller
◦ Thus, section 13 specifies cases where a breach of condition be treated as a breach of warranty. As a result of which the buyer loses his
right to rescind the contract and can claim for damages only.
◦ In 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 elects to treat the breach of the conditions, as one of a warranty. That is, he may claim only damages instead
of repudiating the contract.
◦ Eg A agrees to supply B 10 bags of first quality sugar @ rs 625 per bag but 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 @ rs 25 per bag.
◦ 3)Where the contract is non-severable, and the buyer has accepted either the whole goods or any part thereof. 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
Difference between Condition and warranty
Difference Condition Warranty
Meaning A condition is essential to the A warranty is collateral to the
main purpose of the contract main purpose of the contract
Right in case of breach The aggrieved party can repudiate The aggrieved party can claim
the contract or claim damages or only damages in case of breach of
both in the case of breach of warranty
condition
Conversion of stipulations A breach of condition may be A breach of warranty cannot be
treated as a breach of warranty treated as breach of Condition
Liability of the Seller under Law of Torts
◦ Liability of the Seller under Law of Torts Apart from the right to reject the goods or to claim
compensation under the Sale of Goods Act for breach of a condition or warranty on the part of
the seller, the buyer also has the right to claim compensation under the law of torts, if owing to
the negligence of the seller, some dangerous goods have been delivered to the buyer which
cause harm to him. In the case of Clarke v Army & Navy Cooperative Society Ltd. 1903,
the plaintiff purchased a tin of disinfectant powder from the defendant. The lid of the tin being
defective, when the plaintiff tried to open it in the normal way, its contents flew towards her
face and injured her eyes. The fact of the defect in the tins was known to the seller at the time
of sale. It was held that the seller was guilty of negligence in not giving due warning to the
buyer about the said defect and was, therefore, liable to compensate the buyer.
Express and Implied Conditions and
Warranties S 14-17
Condition AND
Warranty

May be either

Express

Implied
Express and Implied Conditions and Warranties S 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.
◦ Express conditions are those which are agreed upon between the parties at the time of contract and are
expressly provided in the contract.
◦ Implied conditions are those which are presumed by law to be present in the contract. It should be noted
that an implied condition may be negated or waived by an express agreement.
◦ Implied conditions are in the contract of sale of goods unless the circumstances of the contract show a
different intention.
 IMPLIED
CONDITIONS
Implied Conditions
Implied Conditions and Warranties
◦ Implied Conditions and Warranties Stipulations in a contract of sale, either in the form of a condition
or a warranty, may either be provided expressly by the parties in the contract or they may be impliedly
there in every contract of sale of goods. Such implied stipulations are covered under sections 14 to 17.
These implied stipulations are binding in every contract of sale, unless they are repugnant with any
express stipulations agreed to by the parties.(S 16(4))
◦ Why Implied conditions and warranties are provided under SOGA?
◦ It is not possible to put all the terms in a contract, so there is a possibility of exploitation by the seller of
the buyer. That's why certain provisions regarding conditions and warranties has been provided by law.
Now a days every legislation is socio-economic legislation. SOGA is also a socio – economic legislation
that's why the object of it is to protect the weaker section of the society I.e the buyer.
 Implied Conditions

Sale by Sample
Condition as to Condition as to
Sale by Sample as well as by
title description
description

Condition as to
Condition as to Condition as to
quality or
merchantability wholesomeness
fitness
Implied Condition as to title Sec 14(a)

◦ Implied Condition as to title- Sec. 14 (a): In a contract of sale,

unless the circumstances of the contract are such as to show a
different intention, there is an implied condition on the part of
the seller that,
◦ in the case of a sale, he has a right to sell the goods and that,
◦ in the case of an agreement to sell, he will have a right to sell the
goods at the time when the property is to pass.
Implied Condition as to title Sec 14(a)
◦ Thus, 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.
◦ Eg 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.
Implied Condition as to title Sec 14(a)

◦ Generally, a person who is the owner of the goods or

who is owner's agent may sell the goods. If a person has
no title to the goods or otherwise does not have a right to
dispose of certain goods, the buyer of such goods has a
right to reject them and to claim back the price if the
same has already been paid and refuses to pay if the price
has not been paid till then.
Implied Condition as to title Sec 14(a)
◦ In the case of Rowland v Divall,1923 the plaintiff purchased a motor car
from the defendants and used the same for several months. The
defendant had no title to the car and, therefore, the plaintiff was
compelled to give it up to the true owner. The plaintiff sued the
defendant to recover back the price which he had already paid. It was
held that even though the buyer had used the car for some months, he
was entitled to recover back the whole of the price paid by him. Want of
title to the goods is not the only factor because of which the seller may
not have a right to sell the goods.
Implied Condition as to title Sec 14(a)
◦ If a vendor can be stopped by process of law from selling, he has not the right to sell. For example in
the case of Niblett v Confectioners Materials Co.,1921 the seller sold to the buyers tins of condensed
milk c.i.f. from New York to London. Some of the tins were bearing the labels marked “Nissly Brand”
which was the trademark of a third person, Nestle Co. At the instance of the Nestle Co. the
Commissioner of Customs detained the goods.
◦ The buyers had to remove those labels before taking delivery of those tins of condensed milk. Having
suffered a loss, by selling the tins of condensed milk without proper labels at a lower price, the buyers
sued the sellers to claim compensation. The Court of Appeal held that the sellers had made a breach of
condition that they had a right to sell the goods and as such they were bound to pay damages for the
loss suffered by the buyer.
◦ If the seller has no title and the buyer has to make over the goods to the true owner, he will be entitled
to refund of the price
Implied Condition in Sale by Description-
Sec. 15
◦ Implied Condition in Sale by description—Where there is a
contract for the sale of goods by description, there is an implied
condition that the goods shall correspond with the description;
and, if the sale is by sample as well as by description, it is not
sufficient that the bulk of the goods corresponds with the
sample if the goods do not also correspond with the description.
Implied Condition in Sale by Description-
Sec. 15
◦ When there is a contract for sale of goods by description, there is
an implied condition that the goods supplied shall correspond
with the description. Hence, it is the responsibility of the seller
that the goods must correspond with the description. In other
words, the goods could be recognized or identified as the seller
had described them to be. In case the goods do not correspond
with the description, there is a breach of implied condition and
the buyer has a right to reject the goods.
Implied Condition in Sale by Description-
Sec. 15
◦ Where there is a contract of sale of goods by description, there is an implied
condition that the goods shall correspond with the description. 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.
◦ Thus, it has to be determined whether the buyer has undertaken to purchase the
goods by their description, I.e. whether the description was essential for identifying
the goods where the buyer had agreed to purchase. If that is required and the goods
tendered do not correspond with the description, it would be breach of condition
entitling the buyer to reject the goods.
Implied Condition in Sale by Description-
Sec. 15
◦ It is a condition which goes to the root of the contract and the breach of it entitles the buyer to
reject the goods whether the buyer is able to inspect them or not.
◦ Eg A ship was contracted to be sold as copper fastened vessel but actually it was only partly
copper fastened. Held that goods did not correspond to description and hence could be
returned or if buyer took the goods, he could claim damages for breach
◦ Eg the internet website of a leading photocopying company offered a “2003 Machine”, in new
condition and with original parts. Mr. Manzoor placed an order for the same, for his shop.
When the machine arrived, it was found that the stand was partly broken, the glass was
not original and a few switches were not functioning. Mr. Manzoor was entitled to reject the
machine since the goods (viz., the photocopy machine) did not correspond with the
description on the website.
Implied Condition in Sale by Description-
Sec. 15
◦ As stated by Lord Blackburn: "If you contract to sell peas, you cannot oblige a party to take beans. If the description of
the article tendered is different in any respect, it is not the article bargained for, and the other party is not bound to take
it."
◦ The Act however does not define "description". A sale has been deemed to be by the description.
◦ 1)where the class or kind to which the goods belong has specified. Eg Egyptian cotton, java sugar, Shiffield crockery
etc and
◦ 2)Where the goods have been described by certain characteristics essential to their identification, eg, jute bales of
specified type, steel of specific dimension etc.
◦ It may be noted that the description in these cases assumes that form of a statement or representation as regards the
identity of particular goods by reference to the place of origin or mode of packing etc. Whether or not such a statement
or representation is essential to the identity of the goods is a question of fact depending, in each case, on
the construction of the contract.
Implied Condition in Sale by Description-
Sec. 15
◦ The description may be regarding the class or kind of the goods, e.g., First
quality wheat or B-30 sugar or long staple cotton, weight or measurements
of the goods or the condition of the goods sold or the type of packing, etc.
It is not enough that some description of the goods has been given, what is
necessary is that the description was of the essence of the contract in the
sense that the buyer must have relied on the description for the identity of
the goods to be supplied by the seller. The term 'sale of goods by
description' must apply to all cases where the purchaser has not seen the
goods, but is relying on the description alone.
Implied Condition in Sale by Description-
Sec. 15
◦ In Varley v Whipp, there was a contract for the sale of a second hand reaping
machine which the buyer had not seen. The seller described it as a new
machine a year before and having cut only 50 to 60 acres. After delivery, the
buyer found that the machine was not in accordance with the description given
by the seller. It was held that the buyer was entitled to reject the machine.
◦ In Acors Ltd. V E.A. Ronaasen & Sons,1933 the seller agreed to supply a
quantity of staves of timber which were to be of half inch thickness. Some of
the staves were not of the required thickness. It was held by the House of
Lords that the buyers were entitled to reject the goods.
Implied Condition in Sale by Description-
Sec. 15
◦ In Re Moore & Co. Ltd. And Laundauer & Co.,1921 it was held that the mode of
packing may constitute a part of the description of the goods. Here the seller agreed
to supply 3,000 tins of canned fruit which were to be packed in case, each case
containing 30 tins. When the goods were tendered some of the cases contained 30
tins each and some others only 24 tins. It was held that since the goods supplied did
not correspond with the description, the buyers were entitled to reject the whole of
the goods. Reference here may be made to section 37 (3) which provides that where
the seller delivers to the buyer the goods he contracted to sell mixed with goods of a
different description not included in the contract, the buyer may accept the goods
which are in accordance with the contract and reject the rest, or may reject the whole.
Implied Condition in Sale by Description-
Sec. 15
◦ In Manbre Saccharine Co. v Corn Products Co.,1919 there was a contract for
the sale of starch in bags, each bag containing 280 lbs. but the starch was shipped
partly in 220 lbs. bags and partly in 140 lbs. bags. It was held that the size of the
bag constituted a part of the description of the goods and the size of the bag could
be important to the purchase because of the sub-contract or otherwise. Similarly,
in the case of Jormal Kasturchin v Vora Hassanalli Khanbhai, 1934 under the
contract, tea was to be supplied to the buyer in chests, each chest containing 80
lbs. and the seller tenders chests of tea, each chest containing 76 lbs. It was held
to be a breach of contract which entitles the buyer to reject the goods.
Implied Condition in Sale by Description-
Sec. 15
◦ In Antony Thomas v Ayupunni Mani,1960 there was a contract for the supply
of cashew nuts, one if the terms of the contract being that bad nuts shall not
exceed twenty per cent of the total. When the goods were supplied, the bad nuts
exceeded the stipulated percentage. It was held that the stipulation regarding
the proportion of the bad nuts made a basic element of the description of the
goods, the seller had made a breach of the implied condition contained in
section 15 and the buyer was, therefore, entitled to reject the goods and claim
back the part of the price already paid by him. Date of the arrival of the ship at
its destination may also be a part of the description of the goods to be supplied.
Implied Condition in Sale by sample as well
as Description- Sec. 15
◦ Implied Condition in Sale by sample as well as Description- Sec. 15:
When the sale is by sample as well as by description, it is not sufficient
that the bulk of the goods corresponds with the sample if the goods do
not also correspond with the description.
◦ 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. In case the goods correspond with
the sample but do not tally with description or vice versa or both, the buyer
can repudiate the contract.
Implied Condition in Sale by sample as well
as Description- Sec. 15
◦ Sometimes there may be a difference between the sample shown and
the description of the goods. In such a case, the fact that the goods
supplied conform to the sample but do not agree with the description
entitle the buyer to reject the goods because the fundamental condition
in every contract is that the goods should correspond to the description.
◦ Eg A agreed with B 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. B can reject the goods.
Implied Condition in Sale by sample as well
as Description- Sec. 15
◦ In Wallis v Pratt,1911 there was a contract of sale by sample of
seed described as “English sainfoin”. The seed was sown and when
the crop was ready, it was discovered that the seed supplied and the
sample shown were not of “English sainfoin” seed but of “giant
sainfoin” seed. It was held that there was a breach of condition and
the buyer was entitled to recover damages.
Implied Condition in Sale by sample as well
as Description- Sec. 15
◦ In Nichol v Godts, 1854 there was a sale of “foreign refined rape
oil, warranted only equal to the samples.” The oil supplied though
corresponded with the sample, was adulterated with hemp oil.
The jury found that the admixture was not commercially known as
“foreign refined rape oil” and, therefore, it was held that since the
oil supplied was not in accordance with the description, the buyer
was entitled to reject the same.
 RULE
OF CAVEAT
EMPTOR

Two Implied Conditions, being

exceptions to the rule of Caveat
Emptor
The rule of Caveat Emptor
◦ In case of sale of goods, the doctrine 'Caveat Emptor' means 'let the buyer beware'. When
sellers display their goods in the open market, it is for the buyers to make a proper selection or
choice of the goods. If the goods turn out to be defective he cannot hold the seller liable. The
seller is in no way responsible for the bad selection of the buyer. The seller is not bound to
disclose the defects in the goods which he is selling.
◦ It is the duty of the buyer to satisfy himself before buying the goods that the goods will serve
the purpose for which they are being bought. If the goods turn out to be defective or do not
serve his purpose or if he depends on his own skill or judgment, the buyer cannot hold the
seller responsible. The rule of Caveat Emptor is laid down in the section 16.
The rule of Caveat Emptor- S 16

◦ Opening lines of Section 16

◦ "Subject to the provisions of this Act and of any other law for
the time being in force, there is no implied warranty or
condition as to the quality or fitness for any particular purpose
of goods supplied under a contract of sale......"
The rule of Caveat Emptor- Sec. 16
◦ Section 16 incorporates the maxim dominant in mercantile law which is caveat emptor. It
translates as “buyer beware”. The section provides that as a general rule, there is no implied
warranty or condition as to the quality or fitness for any particular purpose of goods supplied
under a contract of sale. This is, however, subject to the provisions of the Act and any other
law for the time being in force. According to this rule, the buyer himself should be careful
while purchasing the goods and he should himself ascertain that the goods suit his purpose. If
the goods are subsequently found to be unsuitable for his purpose, he cannot blame the seller
for the same, as there is no implied undertaking by the seller that he shall supply such goods as
to suit the buyer's purpose. There is no implied condition as to quality or fitness of goods and
buyer will be liable not the seller.
The rule of Caveat Emptor- Sec. 16
◦ For example, A purchases a horse from B. A needs the horse for riding but he
does not mention this to B. The horse is not suitable for riding but is suitable
only for being driven in a carriage. A can neither reject the horse nor can he
claim any compensation from B.
◦ In re Andrew Yule & Co.,the buyer ordered for hessian cloth without
specifying the purpose for which he wanted the same. It was infact needed for
packing. Because of unusual smell, it was unsuitable for the purpose. It was
held that the buyer had no right to reject the same, even if it did not suit his
purpose.
The rule of Caveat Emptor- Sec. 16
◦ Rule of caveat emptor applies when the goods are sold in open market because
if the goods are sold in black market then rule of criminal law will apply not
the SOGA.
◦ Rule of caveat emptor also provides that if you want to be clever then bear the
risk also.
◦ According to this rule, the buyer himself should be careful while purchasing
the goods and he should himself ascertain that the goods suits to
his requirements or not.
 EXCEPTIONS
The following two implied conditions are exceptions to the rule of caveat emptor.
 Two exceptions of Caveat Emptor Rule

Exception to this
Implied Condition as to quality or
Goods purchased under patent or brand
Fitness (S 16(1) name (S 16(1)

Exception to this
Implied Condition as to
Buyer has examined the goods and defect is
Mechantable Quality (S 16 (2) patent one

Exceptions to Goods sold by description (S 15)

Rule of Caveat Sale by Sample (S 17)

Emptor
Goods by sample as well as description (S 15)

Trade Usage (S 16(3)

Seller actively conceals a defect or is guilty of fraud

Implied Condition as to quality or fitness -
Section 16 (1)
◦ Implied conditions as to quality or fitness—Subject to the provisions of this Act and of any other
law for the time being in force, there is no implied warranty or condition as to the quality or fitness
for any particular purpose of goods supplied under a contract of sale, except as follows:—
◦ (1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose
for which the goods are required, so as to show that the buyer relies on the seller’s skill or
judgment, and the goods are of a description which it is in the course of the seller’s business to
supply (whether he is the manufacturer or producer or not), there is an implied condition that the
goods shall be reasonably fit for such purpose:
◦ Provided that, in the case of a contract for the sale of a specified article under its patent or other
trade name, there is no implied condition as to its fitness for any particular purpose.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ Ordinarily, there is no implied condition as to the quality or fitness of the goods for any
particular purpose.
◦ However, the condition as to the reasonable fitness of goods for a particular purpose may be
implied if the buyer had made known to the seller the particular purpose of his purchase and
for which the goods are required so as to show that he relied upon the skill and judgment of
the seller to select the best goods and the goods are of description which is in the ordinarily
course of seller's business to supply, it is the duty of the seller to supply such goods as are
reasonably fit for that purpose. But this implied condition will not apply if the goods have
been sold under a trademark or a patent name.
◦ Eg an order was placed for some trucks to be used for heavy traffic in a hilly country. The
trucks supplied by the seller were unfit for this purpose and broke down. There is a breach of
condition as to fitness.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ Implied Condition as to quality or fitness - Section 16 (1): If the following requirements are
satisfied, there is considered to be an implied condition from the side of the seller that the
goods supplied shall be reasonably fit for the purpose for which the buyer wants them:
◦ (i)The buyer, while purchasing the goods, expressly or by implication, makes known to the
seller the particular purpose for which the goods are required by him, so as to show that the
buyer relies on the seller's skill or judgment; and
◦ (ii) the goods are of a description which it is in the course of the seller's business to supply
(whether he is the manufacturer or producer or not).
◦ Thus the buyer while purchasing the goods expressly (if the goods are for multipurpose use) or
impliedly (when the goods are for single use) (eg wrist watch) tells the seller then seller will
be liable not buyer.
◦ 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. Held that A was entitled to do so as the only purpose for which he wanted the set of teeth was not fulfilled.
◦ A went to B 's shop and asked for a Merrit sawing machine. B gave A the same and A paid the price. A relied on the trade name
of the machine rather than on the skill and judgment of the seller B. in this case, there is no implied condition as to fitness of
the machine for buyer's particular purpose.
◦ As a general rule, it is the duty of the buyer to examine the goods thoroughly before he buys them in order to satisfy himself
that the goods will be suitable for his purpose for which he is buying them. This is known as rule of caveat emptor, let the
buyer beware.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ Thus, if in the case of Andrew Yule & Co.,1932 the buyer had informed the seller that he
needed the hessian cloth for packing purpose, he could reject the cloth if he found that the
same was unsuitable for that purpose. The purpose may be made known to the seller expressly
or by implication. When the goods can be used only for one purpose, the purpose need not be
told to the seller as he is deemed to know the same. But where the article can be used for a
number of purposes, the buyer should tell the seller for which he requires the goods, if he
wants to make the seller responsible.
◦ Bombay Burma Trading Corp. Ltd v Aga Mohd, timder was purchased for the express purpose
of using it as railways sleepers and when it was found to be unfit for the purpose, the court
held that the contract could be avoided.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ In Raghava Menon v Kuttappan Nair,1962 the plaintiff purchased a wrist watch from the
defendant. The watch did not give satisfactory service inspite of the fact that the seller had
tried to set it right a number of times. The buyer sued the seller for the replacement of the
watch or the refund of the price. It was held that the seller was bound to replace the watch or,
in the alternative, to pay back its price. It was observed that “the plaintiff is a layman and he
approaches a fairly reputed firm like the defendant dealing in watches and purchases a watch
from them, not for any special purpose, but for the common purpose of knowing the correct
time. In such a case, section 16 (1) of the sale of Goods Act must apply, because the buyer
makes known to the seller, by implication, the purpose for which he purchases the watch and
also relies on the seller's skill or judgment.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ In Priest v Last,1903 the plaintiff went to the defendant, a chemist,
and asked for a hot-water bottle. The defendant sold him an
American rubber bottle. The plaintiff had purchased the bottle for
his wife and while she was using, it burst and injured her. The court
held that the buyer's purpose was clear when he demanded a bottle
for hot water for hot water, thus the implied condition as to fitness
is not met in this case.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ In Chaproniere v Mason, 1905 the buyer purchased a bun from a
bakery, and as he tried to bite it, his teeth struck on a stone in the
bun as a consequence of which one of his teeth was broken and an
abcess formed in the jaw. Such a bun was held to be unsuitable for
the purpose of eating, i.e., the purpose for which the buyer had
purchased the same. Moreover, the fact that the buyer had
purchased the bun from a particular bakery was sufficient to show
that the buyer had relied on the seller's skill and judgment.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ In Frost v Aylesbury Diary Co.,1905 the plaintiff purchased milk
from a milk dealer for his family's use. The milk contained typhoid
germs, the plaintiff's wife was infected by it and died. Here the
purpose for which the milk was to be used was, by implication,
made known to the seller. Since the milk was unfit for human
consumption, there was a breach of implied condition for which the
defendant was held liable.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ In Grant v Australian knitting Mills Ltd.,1936 the plaintiff purchased two
underwears from a retailer who dealt in that type of goods. The underwears
contained certain chemicals and he contracted dermatitis by wearing them. It
was held by the Privy Council that the buyer had made known to the seller,
impliedly, the purpose for which he wanted the garments and relied on the
seller's skill or judgment. There was a breach of implied condition that the
goods shall be reasonably fit for a certain purpose and the seller was held
liable to the buyer in damages.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ This implied condition provides that the goods shall be suitable for a particular
purpose. It does not mean, however, that they shall be suitable for every buyer.
If they are generally suitable for a normal buyer and would not have caused
any harm to him but cause harm to a particular buyer due to that buyer's over
sensitiveness, the seller cannot be blamed for the same.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ For example, in the case of Griffith's v Peter Conway Ltd.,1939 the plaintiff
bought a Harris tweed coat and caught dermatitis by using it. It was found that
the plaintiff had caught the disease as her skin was abnormally sensitive and a
normal wearer would not have been affected by using the coat. Therefore, held
that the plaintiff could not claim any compensation because there was no
implied condition that the goods shall suit an abnormal buyer like the plaintiff.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ The implied condition of fitness is applicable not only to the goods which are sold but also to
the goods which are supplied under the contract of sale. In Gedding v Marsh,1920 the
defendant supplied some bottles of mineral water to the plaintiff. The bottles were not the
subject-matter of sale as the empty bottles had to be returned after the contents had been
consumed. One of the bottles being defective burst in the plaintiff's hand and injured her.
Although the bottles were not sold and they were not to become the buyer's property, it was
held that there was, nevertheless, an implied condition that both the bottle and their contents
were reasonably fit for the purpose for which they were required, and the sellers were liable to
the plaintiff to compensate her for breach of the implied condition.
Exception:-Goods purchased under patent or
brand name
◦ Section 16 Provided that, in the case of a contract for the sale of a specified article under its
patent or other trade name, there is no implied condition as to its fitness for any
particular purpose.
◦ The proviso to section 16 (1) provides that when the buyer buys an article by specifying its patent or
other trade name, there is no implied condition of the fitness of the goods for any particular purpose.
Since the buyer defines the goods by mentioning the trade name, the seller's only responsibility is that the
goods shall be of the same trade name as demanded by the buyer.
◦ In Chanter v Hopkins, the buyer's order to the seller said: “Send me your patent hopper and apparatus to
fit up my brewing copper with your smoke-consuming furnace.” The seller supplied the buyer the
furnace and the apparatus asked for but the same was found to be not fit for the purpose of the buyer's
brewery. It was held that the seller had supplied what was ordered and he was entitled to recover its price
from the buyer.
Goods purchased under patent or
brand name

◦ The proviso is applicable when the buyer buys by mentioning a

trade name and does not at all rely on the skill and judgment of the
seller as to the fitness of the goods for any particular purpose then
the buyer is liable. If the buyer mentions the trade name but still
relies on the skill and judgment of the seller as regards the stability
of the goods for any particular purpose, the implied condition of
fitness is applicable in such a situation then in such a case the seller
will be liable.
Implied Condition as to quality or fitness -
Section 16 (1)
◦ In Baldry v Marshall,1925 the plaintiff, who wanted to purchase a motor car, approached the
defendants, who were motor car dealers. The plaintiff told the defendants that he wanted a
comfortable car suitable for touring purposes. The defendants recommended their “Bugatti
car” for the purpose and also showed a specimen of the same. The plaintiff thereupon ordered
for “Eight-cylinder Bugatti car”, which was supplied. The car having been found to be
uncomfortable and also unsuitable for touring purposes, the plaintiff claimed to reject the car
and recover back the purchase money paid by him. It was held that he was entitled to do so as
the plaintiff while ordering the car by its trade name was still relying on the recommendation
of the seller as regards the suitability of the car for the specific purpose.
Implied Condition of Merchantable quality-
S. 16 (2)
◦ Implied Condition of Merchantable quality- S. 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:
◦ Provided that, if the buyer has examined the goods, there shall
be no implied condition as regards defects which such
examination ought to have revealed.
Implied Condition of Merchantable quality-
S. 16 (2)
◦ Implied Condition of Merchantable quality- S. 16 (2): This section contains another implied condition
which is by way of an exception to the rule of caveat emptor. It has been noted in section 15 that when
the goods are bought by description, there is an implied condition that the goods supplied shall answer
that description. According to this sub section, there is a further implied condition in such a case is
◦ the goods supplied shall be of merchantable quality.
◦ Where- (i) the goods are bought by description,
◦ (ii) from a seller who deals in the 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.
◦ Even if the goods are purchased in trade name, then implied condition that the goods must be of
merchantable quality could still be invoked.
Implied Condition of Merchantable quality-
S. 16 (2)
◦ The term merchantable quality has not been defined in the Act. In England, however, this term
is defined by section 62 (1A) Sale of Goods Act, after the amendment introduced by the
Supply of Goods (implied Terms) Act, 1973 as follows: “Goods of any kind are of
merchantable quality within the meaning of this Act if they are as fit for the purpose or
purposes for which goods of that kind are commonly bought as it is reasonable to expect
having regard to any description applied to them, the price (if relevant) and all the other
relevant circumstances.
◦ Thus it means goods of such a quality and in such a condition a man of ordinary prudence
would accept them as goods of that description after examination .
Implied Condition of Merchantable quality-
S. 16 (2)
◦ In the case of Bristol Tramways v Fiat Motors Ltd,1910 the term has been
defined in the following words: It means that the article is of such quality and
in such condition that a reasonable man acting reasonably would after a full
examination accept it under the circumstances of the case in performance of
his offer to buy that article, whether he buys for his own use or to sell again. It
is not sufficient that the goods are marketable or saleable (that is, no doubt, the
dictionary meaning of the word) for, in the statutory sense, the significance of
the word 'merchantable' is relative, the test being, are the goods merchantable
or not under the particular description in the contract. A.M.N. Khoyee & Co.
v Gordon Woodroffe & Co. 1937
Implied Condition of Merchantable quality-
S. 16 (2)
◦ If the goods are not saleable in the market as the goods of a certain description, they are not of
merchantable quality. In Grant v Australian Knitting Mills Ltd.,1936 the underwears' contained certain
chemicals which could cause skin disease to a person wearing them next to skin, it was held that because
of such a defect the underwears' were not of merchantable quality.
◦ Even when the goods are purchased by their trade name and the implied condition as to their quality or
fitness is not there, another implied condition as to merchantable quality could still be invoked.
In Wilson v Cockerell & Co Ltd.,1954 the plaintiff ordered a consignment of “coalite” from the
defendant. The coalite supplied contained some explosive substance, and when used in the plaintiff's fire-
place, it resulted in the explosion and caused damage to the plaintiff's property. It was held that since the
goods were purchased under a trade name, the implied condition as to quality or fitness was not there,
but there was a breach of implied condition as to merchantable quality and the defendant was liable for
the same.
Implied Condition of Merchantable quality-
S. 16 (2)
◦ In Morelli v Fitch and Gibbons,1928 the plaintiff asked for and purchased a bottle of 'Stone's
Ginger Wine' from the seller. While the buyer was trying to open the bottle with a corkscrew,
the bottle broke due to some defect and his hand was cut. It was held that in this case there
was a sale of goods by description, the bottle was not of merchantable quality and the buyer
was entitled to claim damages
◦ In Shivallingappa Shankarappa Mendse v Balakrishna and son,1962 the buyer ordered for
the best quality 'toor daal'. The daal was loaded in rain and by the time it reached the
destination, it became damaged by moisture. It was held that since the damaged toor dhal
could not be sold as that of best quality as it was no longer of merchantable quality, the buyer
having taken the delivery as the seller refused to take them back, he was entitled to claim
damages from the seller
Implied Condition of Merchantable quality-
S. 16 (2)
◦ In Summer Permain Co. v Webb & Co. ltd.,1922 it has been held that merchantable does not mean
that the goods are saleable under the law of another country. There the defendant sold 'Webb's Indian
Tonic Water' which was to be shipped to Argentina for re-sale. The tonic water contained salicylic acid.
The sale of articles of food or drink containing salicylic acid was banned by the Argentine law. The
buyers sued the sellers contending that as the goods could not be sold in Argentina, they were not of
merchantable quality. It was held that the sellers could not be made liable for the breach of implied
condition as the goods were not rendered unmerchantable merely because they were not legally saleable
in Argentina.
◦ Eg if a person orders motor horns from a manufacturer of horns, and the horns supplied are scratched and
damaged owing to bad packing, he is entitled to reject them as unmerchantable.
◦ A bought a black velvet cloth from c and found it to be damaed by white ants. Held that the condition as
to merchantability was broken.
Exception:-Condition Negatived when the
goods examined by the buyer
◦ Condition Negatived when the goods examined by the buyer- proviso: S 16(2)
◦ Provided that, if the buyer has examined the goods, there shall be no implied condition as
regards defects which such examination ought to have revealed.
◦ Section 41 of the Act entitles the buyer to have an opportunity to examine the goods before he
can be called upon to accept them. Such an opportunity will enable the buyer to ascertain
whether the goods are in conformity with the contract. Merely taking of the delivery of the
goods by the buyer does not imply that he has accepted them. If the buyer has not previously
examined the goods, he can do so even after taking the delivery and reject them if he finds that
they are not in conformity with the contract. If the buyer has been afforded an opportunity and
the buyer does not avail of it, he is deemed to have waived his right of examining the goods.
Condition Negatived when the goods
examined by the buyer
◦ Now coming to the proviso to section 16 (2).
◦ It says where the buyer has examined the goods, there shall be no implied
condition of merchantability as regards defects which such examination
ought to have revealed.
◦ This means that the defect should have been a patent defect. In case of latent
defects, the buyer is still protected inspite of the fact that he has examined the
goods. To exclude the working of implied condition of merchantability, it is
not necessary that the buyer's examination of the goods must be a thorough
one. Even if he examines them cursorily, the implied condition is not
applicable.
Condition Negatived when the goods
examined by the buyer
◦ It means the implied condition of merchantable quality will be excluded when the buyer has
examined the goods and the defect in the goods is a patent defect (on the face). But in case of
latent defect the buyer is still protected inspite of the fact that he examined the goods.
◦ Defects are of two types
◦ Patent defect these are those defects which can be found on examination by a person of
ordinary prudence with the exercise of due care.
◦ Latent defect: these are those defects which are not clear on the face of it. That means if an
ordinary person examine the goods then such kind of defects can't be found on the face of it.
And in such cases even after the examination by the buyer the seller is still liable.
Condition Negatived when the goods
examined by the buyer
◦ Thus, in Thornett and Fehr v Beers and Sons, 1919 there was a sale of a number of barrels
of vegetable glue. The buyers having an opportunity to examine the barrels examined them
only from outside for want of time. The buyers subsequently found that the glue was not of
merchantable quality and this defect could have been discovered if the barrels had been
examined properly from inside. In an action by the buyers for damages for breach of implied
condition as to merchantable quality by the sellers, it was held that since the buyers had
examined the goods and the defect in the goods was a patent one, they were not entitled to sue
the sellers for the same. Implied condition is negative on examination if the defect is a patent
one. In case of latent defects, the implied condition of merchantability continues inspite of the
examination of the goods by the buyer.
Condition Negatived when the goods
examined by the buyer
◦ In AMN Khoyee & Co v Gorden Woodroffe & Co.,1937 there was a contract for the sale of skins
which were to be of “fair average quality”. The goods, when tendered, were inspected, approved and
accepted. There were certain defects which could not be revealed at the time of delivery by such an
examination in their dry salted state. Defects were discovered when the skins were 'put to work', i.e., 'put
into water'. It was held that even though the buyers had examined the goods, they were entitled to claim
damages for the breach of implied condition of merchantability as the skins were not of merchantable
quality. Similarly, if the defect in the underwears purchased by the plaintiff could not be discovered when
they were purchased and it could be known when they were put to use the defect being a latent one, the
buyers could claim compensation when they caused him skin disease and thus were found to be of
unmerchantable quality. Grant v Australian Knitting Mills Ltd.,1936
Implied Condition in a Sale by sample- S. 17
◦ Implied Condition in a Sale by sample—
◦ (1) A contract of sale is a contract for sale by sample where there is a term in the
contract, express or implied, to that effect.
◦ (2) In the case of a contract for sale by sample there is an implied condition—
◦ (a) that the bulk shall correspond with the sample in quality;
◦ (b) that the buyer shall have a reasonable opportunity of comparing the bulk with the
sample;
◦ (c) that the goods shall be free from any defect, rendering them unmerchantable, which
would not be apparent on reasonable examination of the sample.
Implied Condition in a Sale by sample- S. 17
◦ This section states that a contract of sale is by sample when there is a term in the contract, express or
implied to that effect.
◦ According to section 17 (2), there are three implied conditions in a contract of sale by sample:
◦ (i) The first implied condition is that the bulk shall correspond with the sample in quality. A contract of
sale by sample implies an undertaking by the seller that the goods to be supplied will be similar to the
sample. If the goods supplied do not correspond with the sample, it amounts to a breach of implied
condition by the seller and the buyer, in such a case, is entitled to reject the goods. If the buyer, instead of
rejecting, accepts the goods or a part thereof when the contract is not severable, then his only remedy is
to claim damages because in such a case, the breach of a condition is to be treated only as a breach of
warranty. (S 13(2)
Implied Condition in a Sale by sample- S. 17
◦ (ii) Another implied condition in a sale by sample is that the buyer shall have a reasonable
opportunity of comparing the bulk with the sample to satisfy himself that the goods supplied
are in accordance with the sample. If the seller does not afford an opportunity to the buyer
to compare the bulk with the sample at a proper and convenient time, the buyer has a right to
repudiate the contract. The right to inspect the goods need not always be exercised before
taking the delivery of the goods.
◦ Eg in a case of sale by sample of two parcels of wheat, the seller allowed the buyer an
inspection of the smaller parcel but not of the larger parcel. In this case it was held that the
buyer was entitled to refuse to take any latent defect of the parcels of wheat.
Implied Condition in a Sale by sample- S. 17
◦ If the buyer could not examine the goods before taking the delivery, e.g., the
goods were sent in sealed parcels through rail and the buyer had taken the
delivery in the form in which they arrived, the buyer may exercise his right of
inspection after taking the delivery. Of course, he must examine the goods
within a reasonable time after taking the delivery failing which he will be
deemed to have accepted the goods as they are. If on exercising this right of
examining the goods, the buyer finds that the goods are not in conformity with
the sample, he may reject them.
Implied Condition in a Sale by sample- S. 17
◦ (iii) The third implied condition in a sale by sample is that the goods shall be free from any
defect, rendering them unmerchantable which would not be apparent on reasonable
examination of the sample. It means that it is not enough that the goods correspond with the
sample. It is further necessary that the goods should not have been rendered unmerchantable
because of some latent defect in the sample. If the buyer takes the delivery of the goods after
examining and satisfying himself that they correspond to the sample, he subsequently
discovers that because of certain latent defect in them, the goods are unmerchantable, he can
still reject them or bring an action against the seller to claim compensation.
Implied Condition in a Sale by sample- S. 17
◦ This condition is applicable only with regard to defects which could not be discovered by an
ordinary examination of the goods. But if the defects are latent then the buyer can avoid the
contract.
◦ Eg 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.
Implied Condition in a Sale by sample- S. 17
◦ In Godley v Perry,1960 a retailer purchased from a wholesaler a number of toy catapults in a
sale by sample. The retailer sold one of those catapults to a boy and when the boy tried to play
with it, it broke into pieces because of manufacturing defect therein and the boy was injured.
The retailer was held bound to pay compensation to the boy and in his turn he sued the
wholesaler to claim indemnity from him. It was found that the retailer had examined the
sample and a reasonable examination on his part could not reveal this defect. It was held that
under these circumstances, the wholesaler was bound to indemnify the retailer for the loss
suffered by the latter.
Implied Condition in a Sale by sample- S. 17
◦ In Mody v Gregson, the defendants agreed to manufacture and supply 2,500 pieces of grey
shirting according to the sample and each such piece was to weigh seven pounds. The goods
when manufactured and delivered were found to be according to the sample but they contained
china clay to the extent of 15% of their weight which had been added to increase their weight.
The presence of such a defect could not be discovered on the reasonable examination of the
sample and the same had rendered the goods unmerchantable. The seller was held liable
for the same.
Implied Condition in a Sale by sample- S. 17
◦ In Drummond v Van Ingen,1887 the plaintiffs, who were worsted cloth manufacturers, agreed to supply “mixed
worsted coatings” as per certain samples to the defendants who were cloth merchants. The goods when supplied
corresponded to the samples but were subject to a defect because of which they were found to be unsuitable for being
converted into coats. The same defected existed in the sample also but that was not discoverable by an ordinary and
usual examination which could be made for such type of cloth. The buyers had to dispose of the cloth by auction at a
loss. In an action for price by the plaintiffs, the defendants counterclaimed for damages. It was held that the sellers
were responsible for there was a breach of an implied stipulation that the cloth should be merchantable worsted
coating.
◦ In the case of eatables in addition to the implied condition of merchantability, there is another implied condition that
the goods shall be wholesome.
◦ Eg A supplied F with milk. The milk contained typhoid germs. F's wife consumed the milk and was infected and died.
Held there was a breach of condition and A was liable to pay damages.
IMPLIED
WARRANTIES

Implied Warranties
Implied Warranty
◦ It is a warranty which the law implies into the contract of sale. In other words, it is the stipulation which has not been included
in the contract of sale in express words. But the law presumes that the parties have incorporated it into their contract. It will be
interesting to know that implied warranties are read into every contract of sale unless they are expressly excluded by the
express agreement of the parties.
◦ These may also be excluded by the course of dealings between the parties or by the usage of trade (S62)

Implied
warranties

Warranty as to Warranty as to Disclosure of Warranty as to

undisturbed non existence of dangerous nature quality or fitness
possession encumbrances of goods by usage of trade
Implied Warranty of quiet possession- S. 14
(b)
◦ Implied Warranty of quiet possession- S. 14 (b) :
◦ (b) an implied warranty that the buyer shall have and enjoy quiet possession
of the goods;
◦ In a contract of sale unless the circumstances of the case show a different intention,
there is an implied warranty that the buyer shall have and enjoy possession of the
goods. It means that the buyer's possession of the goods will not be disturbed.
◦ An implied warranty that the buyer shall have and enjoy quiet possession of the
goods. 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
Implied Warranty of quiet possession- S. 14
(b)
◦ In Niblett v Confectioners Materials Co.,1949 the sellers had consigned tins of
condensed milk bearing the labels 'Nissly Brand' which was the trademark of one 'Nestle
Co'. Since the sellers had no right to sell the goods with such labels, the buyers were not
allowed to have the possession of the goods unless the labels had been removed. The
buyers, having received the goods without labels, suffered loss as the same had to be sold
for a lower price. It was held that there was not only breach of the condition that the seller
has a right to sell the goods, there was also a breach of implied warranty of quite
possession and, therefore, the sellers were bound to compensate the buyers. If the seller
sells goods which he does not have a right to sell and a third person claiming a superior
title brings an action against the buyer to recover the goods, the buyer can sue his seller
for the breach of this implied warranty.
Implied Warranty of quiet possession- S. 14
(b)
◦ In Mason v Burningham, 1921 the plaintiff purchased a second-hand typewriter for
20 pounds from the defendant. She thereafter spent a sum of 11-10 pound sh. For
getting it overhauled and putting it in order. Unknown to the parties the typewriter
was a stolen one and the plaintiff was compelled to return the same to its owner. In
an action by the plaintiff against the defendant, it was held that the defendant had
made a breach of warranty implied in a contract of sale of goods that the buyer shall
have and enjoy quite possession of the goods. The plaintiff was entitled to recover
not only the sum of 20 pounds, the price for the typewriter, but also the sum of 11-
10 pounds sh, the amount spent on overhauling, as the same was the loss arising
naturally in the usual course of things.
Implied Warranty against Encumbrances- S.
14 (c)
◦ Implied Warranty against Encumbrances- S. 14 (c):
◦ (c) an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third
party not declared or known to the buyer before or at the time when the contract is made.
◦ There is implied warranty that the goods sold shall be free from any charge or encumbrance in favour of any third
party. If there is a charge or encumbrance on the goods sold and the buyer has to discharge the same, he is entitled to
get compensation for the same from the seller. If the charge or encumbrance of the goods is known to the buyer at the
time of the contract of sale, he becomes bound by the same and does not have any right to claim compensation for
discharging the same.
◦ Eg A pledges his car for a loan of 15000 rs 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 may either ask A to clear the loan or
himself may pay the money and then, file a suit against A for recovery of the money with interest.
Exclusion of Implied terms and Conditions
◦ Exclusion of Implied terms and Conditions Section 62 provides that those rights, duties or liabilities
which might arise under a contract by implication of law may be negative or varied-
◦ (i) By express agreement between the parties, or
◦ (ii) By course of dealing between the parties, or
◦ (iii)By usage, if the usage is such as to bind both parties to the contract.
◦ Parties are free to make any agreement they like and “there is no rule of law to prevent parties from
making any bargain they please”. As regards conditions and warranties, section 16 (4) lays down that
an express warranty or condition does not negative a warranty or condition implied by this Act unless
inconsistent therewith. This means that when the parties expressly agree to such stipulation and the same
is inconsistent with the implied conditions and warranties, the express conditions or warranties will
prevail and the implied ones, mentioned in sections 14 to 17 would be negative.
Exclusion of Implied terms and Conditions
◦ Ward v Hobbs,1878 explains a similar provision of English Law, where the liability was negative by a contract
between the parties. There the plaintiff purchased a herd of pigs from the defendant. The pigs were sold “with all
faults”. The pigs had been suffering from typhoid fever. Those pigs and some other pigs, which got infected with the
disease died. It was held by the House of Lords that the defendant was not liable for the loss to the plaintiff.

◦ Why the exceptions to section 16 is more prevalent than the general rule?
◦ Mostly the contracts are made by the parties on phone so the parties don't have time to go to the seller and inspect the
goods. The goods are purchased generally in large quantity and in such cases, there is no aim to examine all the goods.
To protect the weaker section of the society I.e the buyer.