Condition and Warranties-3

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PRESENTED BY:NIRAV JOSHI


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Contract of Sales-How is it

made? It can be made in writing or by word of

mouth or partly in writing and partly by wordof mouth or may be implied from conduct ordealings of the parties.

There must be an offer to buy or sell goodsfor a price and acceptance of such offer by

another.Contract may provide for immediate delivery

of the goods or delivery by installments ordelivery at a future date.


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Contract may provide for immediate paymentof the price or payment by installment.

It may be for existing or future goods.It must possess all the essential of an

ordinary contract.


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Conditions and

WarrantiesTerms or Stipulations

Contract of Sales of Goods(CSG) carries terms

or stipulation regarding

a. Quality of goods

b. The price and the mode of its payment

c. Delivery of goods

d. Time and place of delivery


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Meaning of ConditionA condition is a stipulation essential to the

main purpose of the contract, the breach of

which gives rise to the right, to treat thecontract as repudiated.

In addition , he may maintain an action fordamages for loss suffered , if any.

A consulted B, a motor dealer, for buying a car suitable for touringpurposes. B suggested that a Bugatti car would be appropriate. Apurchased the same car relying upon his recommendation. The car

turned out to be unfit for the purpose bought for. A, the buyer,wishes to repudiate the contract by rejecting the car and

demanded the refund of the price paid.


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Meaning of WarrantyA warranty is the stipulation collateral to the

main purpose of the contract, the breach of

which gives rise to a claim for damages butnot to a right to reject the goods and treat thecontract as repudiated.


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Illustrations

P goes to R, a horse dealer, and says, I want a horse whichcan run at a speed of 30 kilometers per hour. The horsedealer points out a particular horse and says, This will suityou. P buys the horse. Later on P finds that the horse canrun only at a speed of 20 kilometers per hour. There is a

breach of condition, P can repudiate the contract, returnthe horse to R and get back the price.

But if P says to R, I want a good horse. R shows him a

horse and says, This is a good horse and it can run at aspeed of 30 kilometers per hour, and P buys the horse andfinds later on that it can run at a speed of 20 kilometers perhour only, there is a breach of warranty because thestipulation made by the seller did not form the very basis ofthe contract and was only subsidiary one. The seller gave

the assurance about the running speed of the horse of hisown without bein asked b the bu er hence it is onl of


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How to determine whether

stipulation is a Condition or aContract?

No hard and fast rule to determinewhether a stipulation is a condition orwarranty.

It depends on each case on the

construction of the contact.


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Distinction between ConditionWarranty

Points ofDistinction

Conditions Warranty

Stipulation It is an essential stipulationto the main purpose ofcontract

Warranty is astipulation collateral tothe main purpose

Breach Breach of condition givesright to repudiate thecontract and also to claimdamages

Breach of warrantygives right to claimdamages only.

Treatment Breach of condition may betreated as breach of

warranty

A breach of warrantycannot be treated as a

breach of condition.


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Express condition and

warrantyConditions and warranties may be either

expressed or implied. They are said to beexpress when at the will of the parties theyare inserted in a contract.


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Implied Conditions and

Warranties.Conditions and warranties are said to be

implied when the law presumes theirexistence in the contract automatically thoughthey have not been put into it in expresswords.


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Implied ConditionsUnless otherwise agreed the law incorporates into a

contract of sale of goods , the following implied

conditions:a. Conditions as to title: there is an implied condition

on the part of the seller that

i) in the case of a sale, he has a right to sell the

goods

ii)in the case of an agreement to sell, he willhave a right to sell the goods at the time when theproperty is to pass.

R. purchased a motorcar from D used the same forseveral months. D had no title to the car and,

therefore, R was compelled to return the car to thetrue owner. R sued D to recover back the price whichhe had already paid. He was held entitled to recoverthe whole of the price paid by him despite the fact

that he had used the car for some months ( Rowlandvs Divall).

M d t l t L 3 000 ti f d f it t b k d i


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b. Conditions in a sale by description: Where thereis a contract for the sale of goods by description,there is an implied condition that the goods shallcorrespond with the description. The description

may be in terms of qualities or characteristics ofthe goods

c. Conditions in a sale by sample: When under acontract of sale , goods are to be supplied

according to a sample agreed upon , the impliedconditions are:

i) that the bulk shall correspond with the samplingquality;

ii) that the buyer shall have a reasonable

M agreed to supply to L 3,000 tins of canned fruit, to be packed incases each containing 30 tins. M tendered a substantial portion in casescontaining 24 tins, It was held that the mode of packing constituted apart of the description and, therefore, L was entitled to reject the wholeconsignment ( Re Moore & co. and Landaure & C.)


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d. Condition in a sale by sample as well as bydescription: if the sale is by sample as well as bydescription the goods must correspond both withthe sample as well as the description

e. Condition as to fitness or quality: ordinarily in acontract of sale there is no implied condition orwarranty as to quality or fitness for any particularpurpose of goods supplied; the rule of law being

Caveat Emptor (i.e. let the buyer beware). But animplied condition is deemed to exist on the part ofthe seller that the goods supplied shall bereasonably fit for the purpose for which the buyer

wants them, if the following conditions are satisfied:

N agreed to sell G some oil described as foreign refined rapeseed oil,warranted only equal to sample. The oil supplied , thoughcorresponded with the sample, was adulterated with hemp oil. G wasentitled to reject the goods because the goods supplied did notcorrespond with the description.

X purchased a hot water bottle from Y, a retail chemist. X

asked Y if it would stand boiling water. The chemist (Y) toldhim that the bottle was meant to hold hot water. The bottleburst when hot water was poured into it and injured Xswife. Y is liable to refund the price and pay damagesbecause bottle was unfit for the purpose for which it waspurchased.


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i) the particular purpose for which the goods arerequired must have been disclosed(expressly orimpliedly) by the buyer to the seller.

ii) the buyer should rely on the sellers skill orjudgment.

iii) the sellers business must be to sell suchgoods.

f. Condition as to Merchantability: where the goodsare bought by description from a seller who deals ingoods of that description(whether he is themanufacturer or producer or not), there is animplied condition that the goods shall be of

Where the sunglasses wear to protect the UV rays. But itwould cause skin disease to a person wearing them. It washeld that because of such defect the sunglasses were not

of merchantable quality and the buyers was entitled toreject the goods.


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means that the quality and condition of goodsmust be such that a man of ordinary prudencewould accept them as the goods of that description.goods must be free from any latent or hidden

defects.g. Condition as to Wholesomeness: in case of eatable

or provisions or food stuffs , there is an impliedcondition as to wholesomeness i.e. free from any

defect which render them unfit for humanconsumption.

W bought a bottle of Pepsi from H, a dealer in Pepsi. ThePepsi was contaminated with arsenic. W, on taking thePepsi fell ill. H was held liable to W for the consequentillness.


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Implied Warranties:A) Warranty of Quiet Possession:

There is an implied warranty that the

buyer shall have and enjoy quiet possessionof the goods. This is an extension of theimplied condition as to title.

B). Warranty of freedom from encumbrances:

There is an implied warranty that thegoods are free from any charge orencumbrance in favour of any third person ifthe buyer is not aware of such charge or

encumbrance.

M, a lady purchased a second hand type-writer from B. Shethereafter spent some money on its repair and used it for somemonths. Unknown to the parties the type-writer was stolen one

and M was compelled to return the same to its true owner. Shewas held entitled to recover from the sellers for the breach of

this warranty damages reflecting not merely the price paid butalso the cost of repairs.

X, borrowed Rs. 500 from Y and hypothecated his radio with Yas security. Later on X sold this radio to Z who bought in good

faith. Here Z can claim damages from X because his possessionis distributed by Y having a charge.


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C). Warranty of disclosing the dangerousnature of goods to the ignorant buyer.

There is an implied warranty on the part of theseller that in case the goods are of dangerousnature he will warn the ignorant buyer of theprobable danger.

C purchases a tin of disinfected powder from A. A knows thatthe lid of the tin is defective and if it is opened without special

care it may be dangerous, but tells nothing to C. C opens the tin

in the normal way where upon the disinfectant powder flies intoher eyes and causes injury. A is liable in damage to C as he

should have warned C of the probable danger.


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CAVEAT EMPTORThis means LET THE BUYER BEWARE i.e., theseller is under no duty to reveal unflattering truthsabout the goods sold.

Therefore, when a person buys some goods, bemust examine them thoroughly.

If the goods turn out to be defective or do not suithis purpose or he depends upon his own skills andmakes a bad decision, he cannot blame the seller.


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EXCEPTIONS TO CAVEAT EMPTOR

Fitness for buyers purpose

Sale under a patent or trade name

Merchantable quality

Usage of trade

Consent by fraud


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Condition and Warranties-3

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