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DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

V I S A K H A P A T N A M , A . P . , I N D I A

NAME OF THE PROJECT:

CONDITIONS AND WARRANTY SECTION 12

SUBJECT:
CONTRACTS-II
NAME OF THE FACULTY: MR. P. JOGI NAIDU

NAME OF THE STUDENT:

P.RAJ KUMAR

ROLL NO:
18LLB068

SEMESTER III
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CERTIFICATE

This is to certify that P.RAJ KUMAR, a student of Semester II, Damodaram Sanjivayya
National Law University, has successfully completed the research on “CONDITIONS AND
WARRANTY SECTION 12” under the guidance of MR. P. JOGI NAIDU during the year
2019-2020.

Signature of the Student. Signature of the Teacher.

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ACKNOWLEDGEMENT:

I am grateful to our Administrative LEGAL LANGUAGE AND WRITING Mr. P.

JOGI NAIDU for his valuable guidance, significant suggestions and help for accomplishing
this project regarding “CONDITIONS AND WARRANTY SECTION 12”. I have tried my
best to collect information about the project in various possible ways to depict clear picture
about the given project topic.
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ABSTRACT

The distinction between conditions and warranties in a contract for sale of goods is an area
where the boundaries between the two are blurred. A stipulation may be termed as warranty
but it may be interpreted as a condition. In England, the law relating to these vital terms was
rather in a confused state till the Sale of Goods Act 1893 (hereinafter to be mentioned as
E.A.) was passed. The remedies relating to conditions and warranties are peculiarly unusual.
The basis of such remedies lies in the annals of antiquity and there is no rationale behind
them. It is said that if -there is breach of condition, the remedies for such breach may be
repudiation of contract and/or damages. But if there is a breach of warranty, the buyer's right
is only to claim damages and not to repudiate the contract, even though there may be very
pressing reasons for that. Even, in cases of breach of condition, the right to repudiate is lost
where the seller has accepted the goods or part thereof, if the contract of sale is not severable.
The meaning and construction of the term’s "acceptance" and "non-severable contracts" are
not free from ambiguity and anomaly. Further, once the buyer has accepted the goods, there
is no room for revoking his acceptance. And conditions and warranties define a contract
between the sale of the goods and it is an area for the some of the boundaries between the two
particular parties and there will be blurred and the stipulation will be warranty and it may be
required interpreted as a condition. And in England vital terms are confused till the sale of
goods Act 1893 and they mentioned E.A was passed before that there was lot of confusion
and there are some remedies that are related to the conditions and warranties and some of
them are unusual and remedies lies in the antiquity and there will be no and it is said that if
there is a breach condition and remedy for a such a breach will be repudiation of contract or
other damages and not to repudiate the contract. The remedies relating to conditions and
warranties are peculiarly unusual. The basis of such remedies lies in the annals of antiquity
and there is no rationale behind them. It is said that if -there is breach of condition, the
remedies for such breach may be repudiation of contract and or damages. And the conditions
and warranty tell and defines about the distinction between conditions and warranties in a
contract for sale of goods is an area where the boundaries between the two are blurred. A
stipulation may be termed as warranty but it may be interpreted as a condition.
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TABLE OF CONTENTS

1. INTRODUCTION
2. CONDITIONS AND WARRANTY SECTION 12
3. ACKNOWLEDGING TERMS
4. DELIVERABLE STATE
5. CONDITION
6. WARRANTY
7. DIFFERENCE BETWEEN CONDITION AND WARRANTY
8. CASE LAWS BY SUPREME COURT OF INDIA
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INTRODUCTION

The distinction between conditions and warranties in a contract for sale of goods is
an area where the boundaries between the two are blurred. A stipulation may be termed as
warranty but it may be interpreted as a condition. In England, the law relating to these vital
terms was rather in a confused state till the Sale of Goods Act 1893 (hereinafter to be
mentioned as E.A.) was passed. The remedies relating to conditions and warranties are
peculiarly unusual. The basis of such remedies lies in the annals of antiquity and there is no
rationale behind them. It is said that if -there is breach of condition, the remedies for such
breach may be repudiation of contract and/or damages. But if there is a breach of warranty,
the buyer's right is only to claim damages and not to repudiate the contract, even though there
may be very pressing reasons for that. Even, in cases of breach of condition, the right to
repudiate is lost where the seller has accepted the goods or part thereof, if the contract of sale
is not severable. The meaning and construction of the term’s "acceptance" and "non-
severable contracts" are not free from ambiguity and anomaly. Further, once the buyer has
accepted the goods, there is no room for revoking his acceptance. And conditions and
warranties define a contract between the sale of the goods and it is an area for the some of the
boundaries between the two particular parties and there will be blurred and the stipulation
will be warranty and it may be required interpreted as a condition. And in England vital terms
are confused till the sale of goods Act 1893 and they mentioned E.A was passed before that
there was lot of confusion and there are some remedies that are related to the conditions and
warranties and some of them are unusual and remedies lies in the antiquity and there will be
no and it is said that if there is a breach condition and remedy for a such a breach will be
repudiation of contract or other damages and not to repudiate the contract. The remedies
relating to conditions and warranties are peculiarly unusual. The basis of such remedies lies
in the annals of antiquity and there is no rationale behind them. It is said that if -there is
breach of condition, the remedies for such breach may be repudiation of contract and or
damages. And the conditions and warranty tell and defines about the distinction between
conditions and warranties in a contract for sale of goods is an area where the boundaries
between the two are blurred. A stipulation may be termed as warranty but it may be
interpreted as a condition.
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CONDITIONS AND WARRANTY:

The Sale of Goods Act came on 1st July 1930 and it deals with only the contracts or agreements
that are related to sale and purchase of the goods. The contract of sale of goods, where a seller
transfers or agrees to transfer the property in the goods to the buyer for a specific and related
consideration, i.e. price, has following some of the main essentials for its validity:

TWO PARTIES:

1. Buyer – A person who is agrees to buy goods.

2. Seller - A person who is agrees to sell goods.

3. Goods that forms the particular subject-matter for the contract sale.

4. Transfer of property may or may not be in the physical delivery of goods.

5. All the particular essentials of a contract.

And the sale of the goods act came July 1930 and it deals with only specific contracts and
agreements and there a particular relation between sale and purchase of the goods and also the
contract of sales and goods where the seller will transfer goods or he agrees to transfer the
property in the goods to the buyer for a specific and related consideration and consideration is
very important because in contracts consideration is necessary and also in the condition and
warranty has some valid points which are between two parties and in the conditions and
warranty buyer a person who agrees to buy goods and seller a person who is agrees to sell the
goods and goods that forms the particular subject and matter for the contract sale the transfer
of the property may or may not be in the physical delivery of goods and all the particular
essentials of a contract.
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ACKNOWLDEGING TERMS

Section 2(7) of the Sale of Goods Act, 1930 states that Goods are any kind which are
moveable property and it is not a actionable claim or money or land including stock and shares,
crops, and things that are attached to particular form a and the land which is agreed to be sold,
under the contract of sale.

Goods that are form the subject-matter for the contract of sale against which the buyer pays
some consideration price for the good at the time of completion of the entire contract. Goods
can be classified into 3 different types on the basis of their quality (2):

Existing goods- The goods that all are agreed to the subject matter of the contract by the
respective consent parties and are under the particular possession of the seller at the time of
formation of the contract are referred to as existing goods. These can further be divided into
two different categories:

1. Ascertained or Specific Goods- The goods that are specifically a part of, are identified
and agreed upon at the time when a contract of sale is made, are ascertained goods.

For example, when a customer selects a particular painting or artwork to buy from the seller
at the time of formation of the contract, the painting or artwork it is an ‘ascertained good’
since the customer contracted to purchase that specific painting and artwork only.

1. Unascertained Goods- The goods that are not explicitly identified among similar
goods at the time of formation of the contract are unascertained goods.

For example, A contracts to buy one sack of rice from B. Here, the subject-matter of the
contract, i.e. rice is not identified specifically by the buyer at the time of formation of
contract but is under the possession of the seller

1. Future goods- The goods that are not present with the seller or are not under his
possession at the time of formation of the contact but promises to produce,
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manufacture or acquire the same in order to fulfil the contract. When the seller has
produced/manufactured/ acquired the goods, as agreed upon during the formation of
the contract and are suitable to be transferred to the buyer, the goods are said to be in
a deliverable state and the buyer is bound to take delivery of the goods, so produced.

2. Contingent goods- Section 31 of the Indian Contract Act 1872 defines contingent
contract as, ‘a contract to do or not to do something, if some event collateral to such
contract, does or does not happen’ which means such contracts which are dependent
on some other event or contract. A contingent good in a similar sense means, a good,
the acquisition of which by the seller depends upon a contingency which may or may
not happen (6). For example, A agrees to deliver a T.V. set to B when he receives the
same from the vendor upon fulfilment of his contract with the vendor (between the
seller and the vendor).

The central concept of condition and warranty with respect to the subject matter of the
contract of sale, i.e. goods are explained in section 12 of the Sale of Goods Act, 1930 as a
‘stipulation’ in the contract of sale which may be a condition or warranty.

DELIVERABLE STATE:

Section 20 and 21 of the Sale of Goods Act 1930 elaborate on the concept of ‘Specific goods
in a deliverable state’ and ‘Specific goods to be put into a deliverable state’ respectively.

‘Deliverable state’ refers to the condition of the goods such that the buyer under the contract
is bound to accept the goods delivered to him by the seller according to the contract. ‘Where
there is an unconditional contract for the sale of specific goods in a deliverable state, the
property in the goods passes to the buyer when the contract is made, and it is immaterial
whether the time of payment of the price or the time of delivery of the goods, or both, is
postponed’ (7) whereas for the ascertained goods that are not in their deliverable state at the
time of formation of the contract, and the seller needs to do something in order to put the
good in a deliverable state, the possession of the good in deliverable state passes to the buyer
as soon as he receives the notice of the same.
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CONDITION:

‘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’ (8).

A condition is referred to as, an essential element attached to the subject matter of an agreement
which is mentioned by the buyer to the seller and is either expressed or implied while entering
into the contract. The buyer can refuse to accept the goods delivered by the seller, in case of
non-compliance with the condition mentioned by the seller in the contract. The condition may
be expiring or implied.

If while entering into a contract, the buyer mentions (in words or writing) that the goods are to
be delivered to him before a given date, the date is taken as a condition to the contract since
the buyer expressed it. Whereas, if a buyer contracts to buy a red-colored saree for her
‘wedding’ which is to be held on a date mentioned to the seller, then the time is the implied
condition for the contract. Even if the buyer doesn’t mention the date of delivery (but has
mentioned the date of the wedding or occasion), it is implied on the part of the seller that the
garment is to be delivered before the mentioned date of the wedding. In this case, the seller is
bound to deliver the garment before the date of the wedding as the delivery of the garment after
the said date of the wedding is of no use to the buyer and the buyer can refuse to accept the
same since the condition to the contract is not fulfilled.

WARRANTY

A warranty is referred to as extra information given with respect to the desired good or its
condition. The warranty is of secondary importance to the contract for its fulfilment. Non-
compliance of the seller to the warranty of the contract does not render the contract repudiated
and hence, the buyer cannot refuse to buy the good but can only claim compensation from the
buyer.
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DIFFERENCE BETWEEN AND CONDITION AND WARRANTY:

1. A condition is of primary importance.

2. Breach of condition leads to termination of the contract.

3. The injured party can refuse to accept the goods as well as claim damages in case of
breach of condition.

4. The injured party can refuse to accept goods not fulfilling the condition of the contract.

5. A condition can be treated as a warranty on the wish of the buyer.

6. Defined in Section 12(2) of the Sale of Goods Act, 1930.

WARRANTY:

1. A condition is of secondary importance.

2. In case of a breach of warranty, the injured party is liable to be compensated.

3. The Injured party can only claim damages in case of breach of warranty.

4. The Injured party cannot refuse to accept the goods not fulfilling the warranty.

5. A warranty cannot be treated as a condition.

6. Defined in Section 12(3) of the Sale of Goods Act, 1930.

CASE LAWS: