BBA 210 BL 12/6/2017

 Introduction of Conditions & Warranties

 Essentials of Conditions & Warranties

 Difference between Conditions & Warranties

 Express & Implied Conditions & Warranties

[Sec 14-17]

BBA 210 BL 12/6/2017

 A condition is a stipulation essential to the main
purpose of the contract, the breach of which gives the
aggrieved party a right to repudiate the contract itself.

 In addition, he may maintain an action for damages for

loss suffered, if any, on the footing that the whole
contract is broken and the seller is guilty of non-
delivery.

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ESSENTIALS OF CONDITION

 Essential to the main purpose of the

contract.

 Causes irreparable damage to the aggrieved

party.

 The aggrieved party may cancel the contract

and recover damages.

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 Ram consults Shyam, a motor car dealer for a car suitable for
touring purposes to promote the sale of his product. Shyam
suggests ‘Maruti’ car and Shyam accordingly buys it from
Shyam. The car turns out to be unfit for touring purpose. 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-
fulfilment defeats the very purpose for which Ram purchases
the car, Ram is therefore entitled to reject the car and have
refund the price.

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 A warranty is a stipulation collateral to the
main purpose of the contract, the breach of
which gives the aggrieved party a right to sue
for damage only, and not to avoid the
contract itself.

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ESSENTIALS OF WARRANTY

 Collateral to the main purpose of the

contract.

 Causes damage to the aggrieved party.

 The aggrieved party can only claim

damages but cannot repudiate the contract.

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 Ram buys a new Maruti car from the show room and the car
is warranted against any manufacturing defect under
normal usage for a period of one year from the date of
original purchase and the event of any manufacturing defect
there is a warranty for replacement of defective part if it
cannot be properly repaired. If after six months Ram finds
that the horn of the car is not working he cannot terminate
the contract. The manufacturer can either get it repaired or
replace it with a new horn. Ram gets a right for claim for
damages, if any, suffered by him but not the right of
repudiation.

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Example

Kaushal asks a dealer to supply him a shirt which

would not shrink after use and wash. The dealer
supplies a shirt which shrinks after use and wash.
Kaushal can reject the shirt or keep the shirt and
claim damages. Here the stipulation to supply a
shirt which would not shrink after use and wash is
a condition.

Now if Kaushal buys a particular shirt which is

warranted by the dealer to be one which would not
shrink after use and wash and the shirt does shrink
after use and wash, Kaushal‟s only remedy is to
claim damages

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1. As to value:
A condition is a stipulation which is essential to the main
purpose of the contract,
A warranty is a stipulation which is collateral to the main
purpose of the contract.

2. As to breach:
The breach of a condition gives the aggrieved party the right
to repudiate the contract and also to claim damages or reject
the goods.
Breach of warranty, the buyer to demand only claim for
damage.

3. As to treatment:
A breach of condition may be treated as a breach of
warranty.
But a breach of warranty cannot be treated as a breach of
condition.
BBA 210 BL 12/6/2017
 These cases are as follows:

Voluntary waiver by buyer:

 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 If

the buyer decides to waive the condition , he cannot afterwards insist on
its fulfillment.

Or Acceptance of goods by buyer

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 Illustration:
A agrees to supply B 10 bags of first quality sugar @ Rs. 1625
per bag but supplies only second quality sugar, the price of
which is Rs. 1500 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 condition, accept the second quality
sugar and claim damages @ Rs. 125 per bag.

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Express condition or warranty:
The conditions and warranties which are agreed upon
between the parties either spoken or written.

Implied conditions and warranties:

The conditions and warranties which are applicable automatically by
operation of law.

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  The situation of the contract are such as to show a
different intention there is an implied condition on the
part of the seller that -

(a) Incase of sale, he has a right to sell the goods &

(a) In case of an agreement to sell he will have a right to

sell the goods at the time when the property is to pass.

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 1. Condition as a Title
condition emphasizes that
sell some goods, there is
from him that he is entitled
property to the buyer.
[Sec 14]: This implied
when a person seeks to
an unspoken assurance
to sell them and pass the

 It is not the buyer‟s duty to make inquires to

confirm the seller‟s right to sell.

 If the seller did not have the right to sell those

goods, he being guilty of violation of the implied
condition.

 The buyer may reject the goods or he may accept

them and claim damages for any loss caused to him
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◦ The situations where seller may not have a right to
sell as follows:

◦ Where the goods are sold by person who is neither the

owner nor the agent of the owner. In this case law will
protect the buyer and also the actual owner by making
the unauthorized seller face adverse consequences.

◦ Where the seller may be the owner of goods, but for

some reasons, may not have the right to sell the
goods

◦ E.g. – An owner whose goods are in possession of his

unpaid seller

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Eg :
R bought a car from D used it for 4 months. D had no
title to the car & consequently R had to hand over to
the true owner. Held, R could recover the price paid.

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 2. Sale by Description [Sec 15]:
 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.

 The rule of law contained in Sec 15 is summarised

in the following: “If you contract to sell car or any
product, you cannot oblige a party to take car or any
product”. If the description of the article tendered is
different in any respect, but the other party is not
bound to take it.

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 Sale of goods by description may include the
following :

(1)Where the buyer has not seen the goods & relies on
the description given by the seller

e.g. : W bought a filter machine which he had never

seen & which V the seller described that “ filter
machine is very fine quality”. W found the machine to
be extremely old. Held, W could return the machine as
it did not correspond with the description.

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2. Where the buyer has seen the goods but he , relies
not on what he has seen but what was stated to him &
deviation of the goods from the description is not
apparent.

e.g. : A car was advertised for sale as a “BMW, 2011

model”. The buyer saw the car before buying it. After
buying the car he discovered that while the rear part
of the car was part of 2011 model, the front portion
was part of earlier model. Held, he could return the
car.

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(3) Packing of the goods may sometimes be part of
the description

e.g. : M sold to L 300 tins of Australian fruits

packed in cases containing 30 tins. M tendered a
substantial portion in cases containing 24 tins.
Held, L could reject all the tins as the goods were
not packed according to the description given in
the contract as the method in which the fruit was
packed was an essential part of the description

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  3. Sale by Sample [Sec 17 (1)] :
A contract of sale is a contract of sale by sample
where there is a term in the contract, express or
implied to that effect.

In the case of a contract for sale by sample, there is an

implied condition –

(a) That the bulk shall correspondent with the sample

in quality.
(b) That the buyer shall have a reasonable opportunity
of comparing the bulk with the sample.

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e.g. : N agreed to sell to G some oil described as
“foreign refined oil, warranted only equal to sample.
” The goods tendered were equal to sample but
contained an admixture of hemp oil. Held, G could
reject the goods.

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 4. Condition as to quality or fitness [Sec 16
(1)]:

Normally in a contract of sale there is no

implied condition as to quality or fitness of
the goods for a particular purpose. The
following points should however be noted.

BBA 210 BL 12/6/2017

(1) Where the buyer expressly or by implication
makes known to the seller the particular purpose
for which he needs the goods & depends on the
skill & judgment of the seller whose business it is
to supply goods of that description, there is an
implied condition that the goods shall be
reasonably fit for that purpose.

e.g. : An order was placed for some lorries to be

used “for heavy traffic in a hilly area”. The lorries
supplied were unfit & broke down. There is a
breach of condition as to fitness.

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 (2) If the buyer purchases an article under its trade
name, the implied condition that the articles are fit
for a particular purpose shall not apply, unless the
buyer relies on the seller‟s skill & judgment &
makes known to the seller that he so relies on him.

 e.g. : B told M, a motor car dealer, that he

wanted a comfortable car suitable for touring
purposes. M recommended a “Innova car” & B
thereupon bought one. The car was uncomfortable
& unsuitable for touring purposes. Held, B could
reject the car & recover the price & the mere fact
that B bought the car under its trade name did not
necessarily exclude the condition of fitness.

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(3) Incase the goods can be used for number of
purposes, the buyer must tell the seller the particular
purpose for which he requires the goods. If he does
not, he cannot hold the seller liable if the goods do
not suit the particular purpose for which he buys the
goods.

e.g. : A bought a Smart TV for the video calling. This

fact was not brought to notice of the seller.

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 5. Condition as to Merchantability [Sec 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 are of
merchantable quality.
This means goods should be such as are
commercially saleable under the description by
which they are known in the market at their full
value.

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 There is two conditions :

 1. In this buyer must not have any

opportunity of examining the goods before
use.

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 2. Where the buyer has examined the goods, there is
no implied condition as regards defects which such
examination ought to have revealed.

e.g. : B went to V‟s warehouse to buy some glue. The

glue was stored in barrels & every facility was given
to B for its inspection. B did not have any of the
barrels opened, but only looked at the outside. He
then purchased the glue. Held, as an examination of
the inside of the barrels would have revealed the
nature of the glue & as B had an opportunity of
making the examination, there is no condition as to
merchantable quality.

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 Packing of the goods is an equally important
consideration in judging their „merchantability‟.

e.g. : M asked for a bottle of Stone‟s lemon juice at

F‟s shop. While M was drawing the cork, the bottle
broke & M was injured. Held, the sale was by
description & M was entitled to recover damages as
the bottle was not of merchantable quality.

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 Condition as to Wholesomeness :
In case of eatables & provisions in addition to the
implied condition as to merchantability, there is
another implied condition that the goods shall be
wholesome.

Eg : C bought bun containing a stone which broke

one of C‟s teeth. Held, C could recover damages.

BBA 210 BL 12/6/2017

 Implied Warranties

 Warranty as to undistributed possession :

In a contract of sale, unless there is a contrary intension,

there is an implied warranty that the buyer shall have &
enjoy quiet possession of the goods.

If the buyer is in consequence of the seller‟s defective title

to sell, he can claim damages from the seller.

e.g. – Ram sold a second hand scooter to Shyam spent Rs.

10000 on the repairs of this scooter. This scooter was
seized by the police as it was a stolen one. Shyam filled a
suit against Ram for the recovery of damage for breach of
warranty of quite possession including the cost of repairs.
It was held that Shyam was entitled to recover the same
time.

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 Warranty as to non- existence of encumbrances:
An implied warranty that the goods shall be free
from any charge or encumbrance in favor of any
third party not declared or known to buyer before at
the time the contract is entered.

e.g. – Ram takes loan from Shyam and hypothecated

his scooter with Shyam as security. Later on Ram
sold this scooter to Arun who bought in good faith.
Here Arun can claim damages from Ram because his
possession is distributed by Shyam having a charge.

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 Warranty as to quality or fitness by usage of
trade [Sec 16 (4)] :

An implied Warranty as to quality or fitness

for a particular purpose may be annexed by
the usage of trade

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 Warranty to disclose dangerous nature of goods :
Where the seller knows that the goods are inherently
dangerous to the buyer & that the buyer is ignorant of
the danger, he must warn the buyer of the probable
danger, otherwise he is liable for damages.

Eg : A sold a tin of disinfectant powder to C. He knew

that it was likely to be dangerous if it was not opened
without special care. C opened the tin whereupon the
disinfectant powder flew into her eyes, causing injury.
Held, A was liable for damages to C as he should have
warned C of the probable danger.

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 Caveat Emptor
 This means “Let the Buyer Beware.”

 In a contract of sale, the seller is under no duty

to reveal unflattering truths about the goods
sold.

 The buyer must examine the goods thoroughly

before buying them.

 If the goods turn out to be defective or do not

suit his purpose or if he depends upon his own
skill or judgment & makes a bad selection, he
cannot blame anybody excepting himself.

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Eg : H bought oats from S a sample of which had
been shown to H. H erroneously thought that
the oats were old. The oats were however new.
Held, H could not avoid the contract.

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 EXCEPTION OF CAVEAT EMPTOR
 Implied condition as to quality or fitness.
Where the buyer has made know to the seller the purpose for
which he requires the goods and depends on the seller‟s skill
and judgment, there is an implied condition that the seller
will supply the goods which are fit for that purpose. Section
16(1)

Example: A buys a black yarn from B and finds that

it has been damaged by white ants. The condition as
to merchantable quality is broken and therefore, the
doctrine of broken and therefore, the doctrine
of caveat emptor does not hold good.

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Sale of goods by description.
Where the goods are purchased by description from a seller,
who deals in such class of goods, there will be an implied
condition that the goods shall be of merchantable quality.

Example :English sainfoin seeds, duly exhibited by a

sample, are sold. The bulk corresponds to the sample
but the seeds supplied are giant sainfoins and not
English sainfoin. There is a breach of condition as to
description of goods. So the doctrine of caveat emptor
is not applicable.

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Usage of trade
An implied condition or warranty as to quality or
fitness for a particular purpose may be annexed by
the usage of trade and if the seller deviates from that,
the rule of caveat emptor does not hold good.

Example: A dealer sells a refrigerator to Mohit.

The refrigerator performs all other functions
except making ice. This would amount to
breach
of an implied condition and thus the doctrine
of caveat emptor will not work.

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Consent by fraud.
When the buyer relies on false representation of the seller and
suffers damages, i.e., in a contract where the buyer‟s consent
was obtained by the seller by fraud, the doctrine of caveat
emptor will not hold good.

Example: A bought 3000 tins of preserved milk

from U.S.A. The tins were labeled in such a way as to
infringe the Nestlé's trademark. As a result, they were
detained by the custom authorities. To get the
clearance certificate from the customs, A had to remove
the labels and sell them at a loss. Now A can hold the
seller responsible for fraud and claim damages.

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 It is usual for the seller to make certain statements
about the goods he is selling before a contract of sale is
concluded. A representation made by the seller will
taken as a stipulation if he assumes to assert a fact of
which the buyer is ignorant.

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