Condition and Warranty

Many a times a seller of goods makes certain claims about the goods he offers for sale. These claims may relate to the quality, use, suitability, utility, etc., of those goods. The seller and buyer may also agree upon various terms relating to the subject-matter of the contract. These assurances may be a mere expression of opinion of the seller and may not form part of the contract. But sometimes they may form part of the contract and the buyer buys the goods on the faith of such assurances. In such a case they have legal effect on the contract. 




An assurance or representation which forms part of the contract of sale is termed as ‘stipulation’. All such stipulations cannot be treated at the same footing. Some may be intended to be of a fundamental nature whereas others may be subsidiary or merely an expression of an opinion. Depending upon whether a representation is fundamental or subsidiary, it ranks as a ‘condition’ and ‘warranty’. If a stipulation forms the very basis of the contract, it is a ‘condition’. On the other hand, if the stipulation is collateral to the main purpose of the contract, i.e., is of a lesser importance, then it is known as a ‘warranty’.

 

Definition of Condition

The term ‘Condition’ is defined under Section 12(2) of the Sale of Goods Act, 1930. According to this Section, a condition is a stipulation essential to the main purpose of the contract, the breach of which give rise to a right to treat the contract as repudiated.

Thus, a condition is that stipulation which goes to the root of the contract and thus forms the basis of the contract. It is essential to the main purpose of the contract. It is that obligation the non-fulfilment of which may fairly be considered as a substantial failure to perform the contract at all. Therefore, if a condition is not fulfilled, the buyer has a right to put an end to the contract and also recover damages for the breach of contract.

The aforesaid description of condition is well illustrated by the case of Baldry v. Marshall. In this case ‘B’ consulted ‘M’, a motor car dealer, for a car suitable for touring purposes. M suggested a ‘Bugatti’ car and B accordingly bought it. The car turned out to be unfit for the touring purpose. It was held that the term that ‘car should be suitable for touring purposes was a condition of the contract. It was so vital that its non-fulfilment defeated the very purpose for which B bought the car. He was, therefore, entitled to reject the car and have refund of the price.

 

Definition of Warranty

According to Section 12(3) of the Sale of Goods Act, 1930, 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. In other words, warranty is a stipulation which is not essential to the main purpose of the contract i.e., it is of a subsidiary or collateral nature. If there is a breach of warranty, the buyer cannot repudiate the contract, but he can only claim damages from the seller. In the case discussed above if the buyer had asked for a good car and while selling the car the dealer said that it could run for 15 kms per litre of petrol. But it was discovered that it could run only 12 kms per litre of petrol. Here, the statement made by the seller would amount to a warranty and the buyer could not terminate the contract and he was entitled to claim damages only.

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