CONDITION AND WARRANTY
NEMO DAT QUOD NON HABET AND ITS
RIGHTS OF UNPAID SELLER
MADHUKAR DEV- 024
MANU SINGH BAGHEL - 025
P R AT I K PA R D E S I - 0 3 3
WHAT IS A CONDITION
S T I P U L AT I O N
ESSENTIAL TO THE MAIN PURPOSE OF
T H E C O N T R A C T, B R E A C H O F W H I C H
G I V E S R I S E T O T R E AT T H E C O N T R A C T
A S R E P U D I AT E D O R B R O K E N .
WHAT IS WARRANTY
A warranty is a stipulation collateral to the main
purpose of the contract the breach of which gives
rise to claim for damages but not to a right to reject
the goods and could not treat the contract as
repudiated or broken.
DIFFERENCE BETWEEN CONDITION AND
Condition is an essential
term or stipulation of the
contract which must be
Breach of condition gives
right to the party to reject
the contract and also a
right to claim damages.
Breach of condition may be
treated as breach of
Warranty is a collateral or
incidental stipulation to
the main purpose of the
Breach of warranty does not
gives right to the party to
reject the contract. It only
The breach of warranty
cannot be treated as
breach of condition
IMPLIED WARRANTY AND CONDITION
A. 1)Condition as to title
There are three implied condition on the part of the
seller regarding title to the goods.
A. In case of a sale, he has a right to sell the goods.
In case of an agreement to sell, the seller will have
a right to sell the goods at the time when the
property is to pass.
B. The buyer shall have and enjoy quiet possession
of the goods
C. Goods shall
2)Sale by description
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.
3)Sale by sample
The sale by sample where there is a term in the contract
express or implied to the that effect. There are three implied
condition when the goods are supplied according to sample.
A. That the bulk shall correspond with the sample in quality
B. That the buyer shall have reasonable opportunity of
comparing the bulk with the sample
C. That the goods shall be free from any defect. The defect
shall not be apparent on reasonable examination.
4)SALE BY SAMPLE AND DESCRIPTION
The Sale Is By Sample As Well As By Description , It Is Not
Sufficient That The Bulk Of The Goods Corresponds With
The Sample If The Goods Do Not Correspond With The
Description. Where The Sale Is By Sample As Well As By
Description, The Goods Shall Correspond Both With The
Sample As Well As Description.
There Is No Implied Warranty Or Condition As To The
Quality Or Fitness For Any Particular Purpose Of Good
Supplied Under A Contract Of Sale. There Is An Implied
Warranty As To Quality Or Fitness Under The Following
1)where The Good Are Order For Specific Purpose.
2)where The Buyers Relies On The Seller Skills Or
3)where The Goods Are Bought By Description From A
Seller Who Deals In Goods Of That Description
NEMO DAT QUOD NON HABET - THE PRINCIPLE
Literally mean “ no one gives what he doesn‟t have”
"Subject to this act, where goods are sold by a person
who is not their owner, and who does not sell them
under the authority or with the consent of the
owner, the buyer acquires no better title to the
goods than the seller had, unless the owner of the
goods is by his conduct precluded from denying the
seller's authority to sell.“
The general rule is that only the owner of goods can
sell the goods. Conversely the sale of an article by
a person who is not , or who has not the authority
of the owner, gives no title to the buyer.
THE “NEMO DAT QUOD NON HABET” RULE SAFEGUARDS THE RIGHT
HOWEVER, THERE ARE SOME EXPECTATIONS TO THE RULES
Sale by Mercantile Agent
Sale by Joint Owner
Sale by Seller in Possession after sale
Sale by a Person in Possession under a
F. Sale by Buyer Obtaining Possession Before
Property in Goods has Vested
G. Sale by an Unpaid Seller
H. Sale by Person Under Other law
If the true owner stands by and allows an innocent
buyer to pay over money to a third-party, who
professes to have the right to sell an article, the
true owner will be estopped from denying the thirdparty's right to sell.
SALE BY A MERCANTILE AGENT
A buyer will get a good title if he buys in good faith
from a mercantile agent who is in possession either
of the goods or documents of title of goods with the
consent of the owner, and who sells the goods in
the ordinary course of his business.
SALE BY A CO-OWNER
A buyer who buys in good faith from one of the
several joint owners who is in sale possession of
the goods with the permission of his co-owners will
get good title to the goods.
SALE BY SELLER IN POSSESSION AFTER SALE
Where a seller, after having sold the goods, continues
in possession of goods, or documents of title to the
goods. and again sells them by himself or through
his mercantile agent to a person who buys in good
faith and without notice of the previous sale, such a
buyer gets a good title to the goods.
SALE BY A PERSON IN POSSESSION UNDER A
A buyer buys in good faith from a person in
possession of goods under a contract which is
voidable, but has not been rescinded at the time of
SALE BY BUYER OBTAINING POSSESSION
BEFORE TRANSFER OF OWNERSHIP
If a person has brought or agreed to buy goods
obtains, with the seller's consent, possession of the
goods or of the documents of title to them, any sale
by him or by his mercantile agent to a buyer who
takes in good faith without notice of any lien or
other claim of the original seller against the
goods, will give a good title to the buyer. In any of
the above cases, if the transfer is by way of pledge
or pawn only, it will be valid as a pledge or pawn.
SALE BY AN UNPAID SELLER
Where an unpaid seller has exercised his right of lien
or stoppage in transit and is in possession of the
goods, he may resell them and the second buyer
will get absolute right to the goods.
WHO IS UNPAID SELLER
1. Who has not received the whole of the price
2. Who has received payment in the form of
negotiable instrument or bill of exchange which
“ an unpaid seller is one who has not been paid or
tendered the whole of the price or one who
receives a bill of exchange or other negotiable
instrument as conditional payment and the
condition on which it was received has not been
fulfilled by reason of the dishonour of the
instrument or otherwise.
RIGHTS OF AN UNPAID SELLER
Two heads –
1. When the property in the goods has passed to the buyer.
Right of lien
Right of stoppage in transit
Right of re-sale
2. When the property in the goods has not passed to buyer.
Right of withholding delivery
MEANING OF LIEN
A lien is a right of any one person to retain that,
which is in his possession,
belonging to another,
until certain demands of a person in possession are satisfied.
Right of lien means –
„Right to remain‟ the possession of the goods or property until the claim is
paid or satisfied.
Lien may arise by –
express or implied contract
in ordinary course of dealing
LIEN IS OF TWO KINDS –
1. General Lien – Right to retain the goods until all the
claims of the holder are satisfied.
Particular or specific lien – Right to retain the particular
goods until all the claims arising on those goods are
RIGHT OF LIEN AS APPLICABLE TO UNPAID SELLER
Unpaid seller of goods, who is in possession of them is entitled to retain
possession of them until payment or tender of the price in following cases
Where the goods have been sold without any stipulation as to credit.
Where the goods have been sold on credit and the term of credit has
Where the buyer insolvent and the seller is in possession of the goods.
The right of lien can be exercised only when the seller is in actual
possession of the goods. If he loses it, he loses the right of lien.
If the seller has parted with the documents of title of the goods, he
does not loses his right of lien; if he continues to have actual possession
of the goods.
TERMINATION OF LIEN
Unpaid seller‟s lien is lost under following circumstances ::
When he delivers the goods to a carrier/other bailee for
the purpose of transmission to the buyer without reserving
the right of disposal of goods.
When the buyer or his agent lawfully obtains possession
When the seller waives his right of lien.
MEANING OF TRANSIT
If the goods are delivered to the carrier or bailee by the
seller the transit is commenced and it comes to an end
when the buyer acquires possession thereof.
When goods are in the hands of a middle man, goods
are said to be in transit.
When the right of lien ends, right of stoppage in transit
RIGHT OF STOPPAGE IN TRANSIT
When the buyer of goods becomes insolvent the unpaid seller who has
parted with the possession of the goods has the right of stopping them in
transit, that is to say, he may resume possession of goods as long as they
are in course of transit and may retain them until payment or tender of the
Right of stoppage in transit as applicable to the unpaid seller ::
The seller must be unpaid wholly or partly
The buyer must have become insolvent
The goods must be in transit
WHEN DOES TRANSIT OF GOODS COME TO AN
1. When the buyer takes delivery of the goods from the carrier or other
2. When the buyer or his agent in that behalf obtains delivery of the
goods before their arrival at the appointed destination.
3. When the carrier or bailee on arrival of the goods at the appointed
destination, acknowledges to the buyer or his agent that he holds the
goods on his behalf.
4. When the carrier or other bailee wrongfully refuses to deliver the
goods to the buyer or his agent.
Transit of goods is not deemed to be at an end even if the goods are
rejected by the buyer and the carrie/bailee continues in possession of
HOW IS RIGHT OF STOPPAGE IN TRANSIT
1. By taking actual possession of the goods
2. By giving notice of his claim to the carrier/bailee, in whose
possession the goods are or his principal, to re-deliver the
goods to seller or according to his directions.
Right of lien is to retain possession. Right of stoppage in
transit is to regain possession.
RIGHT OF RE-SALE
When the unpaid seller has exercised his right of lien on his retaining
the possession of the goods or regaining it by exercising the right of
stoppage in transit upon insolvency of the buyer he can re-sale the
goods under following conditions ::
Where the goods are of perishable nature
Where the seller gives notice to the buyer of his intention to re-sell the
goods and the buyer does not pay/tender the price within a reasonable
time after the notice
No notice Is necessary in case of perishable goods
Where the seller has expressly reserved his right of re-sale in case
the buyer makes default
SOME FEATURES OF RIGHT OF RE-SALE
Notice of re-sale is given to the buyer unpaid seller is
entitled to retain the profits
No notice to the buyer no right to recover damages from
the buyer pay the profit arising from re-sale to the buyer
Loss to the seller in re-sale claim it from the buyer as
damages for the breach of the contract
No notice required when the seller has expressly reserved
the right of re-sale in case the price is not paid
RIGHT OF WITHHOLDING DELIVERY
Where the property in the goods has
not passed to the buyer, the seller has
a right to withhold delivery of the
Besides these rights, the seller has the following rights
against the buyer personally ::
1. Sue the buyer for the price of goods
2. The seller may sue the buyer for damages for wrongfully
neglecting or refusing to accept the goods
3. Recover interest from the buyer where there is specific
agreement to that effect or else the seller may charge
interest on the price when it becomes due.