CONDITION AND WARRANTIES
Every contract is made up of stipulations which are divided into two categories, namely, conditions and warranties.
Condition- condition is a stipulation essential to the main purpose of the contract, breach of which give rises to treat the contract repudiated. Eg
Warranty- is a stipulation collateral to the main purpose of the contract, breach of which cannot treat the contract repudiated but give right to claim for damages. Eg
Distinction between condition and warranty
It is essential to the main purpose of the contract
On breach of condition contract may be repudiated
On breach of condition buyer may reject the goods
In breach of condition aggrieved party is not bound to perform the contract
The buyer may treat the breach each of the conditions as breach of the warranty only
It is collateral to the main purpose of contract
On breach of warranty contract cannot be repudiated, but only damages can be claimed
On breach of warranties goods cannot be rejected
In breach of warranty aggrieved party is bound to perform the contract.
A breach of warranty connot be treated as breach of conditions the buyer.
Implied conditions
Conditions may be expressed or may be implied. Express conditions are those which the parties provide for them expressly in the terms of contract. Implied conditions are such as the law incorporates into the contract unless the parties stipulate to the contrary.
- As to title of goods(sec 14(a)) In every contract of sale, there is an implied condition that seller has right to sell the goods Eg A bought a motor car from B and used. Subsequently it was known that B had no title on the car and A had to return the car to the real owner.
- Sale by description (Sec 15) in case of a sale of goods by description, there is an implied condition that goods shall correspond with the description.
Grant Vs Australian Knitting Mills Ltd – woollen under garments case
Eg A advertised to sell red 2008 model maruti 800 car and it is essential that the car must be red maruti 800 and 2008 model.
- Sale by sample as well as description – where a contract is for the sale of goods by sample as well as description, there is an implied condition that goods shall correspond to sample as well as description.
- Fitness of the goods(sec 16(1)) Normally there will be no implied condition with regard to quality or fitness of goods for any particular purpose but under the following circumstances there will be an implied condition:
a) Where buyer has expressly or impliedly made known the intended purpose for which goods are required
b) Buyer relies on sellers skill or judgment
Eg : In Priest Vs Last :- a hot water bottle was bought by plaintiff, from a chemist who sold such articles. While being used by his wife, the bottle burst and injured her. Held, the seller was responsible for damages.
- Merchantable Quality:- In a contract of sale, there is an implied condition that goods purchased are of merchantable quality. By merchantable quality means goods must be fit for human consumption and not harmful for health.
Eg. A purchase some food items form a departmental store. The food was defective and A suffers from food poisoning. A is entitled to claim damages from the seller because goods were not fit for human consumption.
- Usage of trade (sec 16(3)) In a contract of sale there may be any other implied condition with regard to quality or fitness for a particular purpose by usage of trade.
- Sale by sample – where a contract is for the sale of goods by sample, there is an implied condition that goods shall correspond to sample.
a) Bulk should correspond with sample
b) Buyer to have reasonable opportunity to compare.
c) The goods must be free from defects.
Implied warranty
1. Quiet possession of the goods (sec 14) In a contract of sale thgere is and implied warranty that purchaser will receive quiet possession of the goods. Where the buyer has obtained possession of the goods and his right to possession and enjoyment of the goods is in any way disturbed, he has a right to sue the seller for damages
2. Free from encumbrance: In a contract of sale there is an implied warranty that goods are not subject to any right in favor of third party.
3. Usage of trade (sec 16(3)) In a contract of sale there may be any other implied warranty with regard to quality or fitness for a particular purpose by usage of trade.
Doctrine of Caveat Emptor.
Caveat emptor is a Latin expression which means buyers beware. Ordinarily a buyer must buy foods after satisfying himself of their quality and fitness. It is no part of the seller’s duty to point out the defects in the goods he is selling.
Exemptions:- thus the rule of caveat emptor will not apply under the following circumstances.
1. Where the buyer relies upon the skill and judgment of the seller
2. Where the sale is under patent or trade name
3. Merchantability
4. Seller is guilty of fraud: A contract of sale of goods must satisfy all essentials of valid contract and therefore if the consent of the buyer was obtained by fraud, the seller is not protected by the doctrine of caveat emptor. Similarly if the seller knowingly conceals any defect in the goods which the buyer could not discover on a reasonable examination the doctrine of caveat emptor shall not apply.
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