Condition and warranties

1. 1
CONDITION AND WARRANTIES
PREPARED BY
Dr. R.SANGEETHA
ASSISTANT PROFESSOR
PG & RESEARCH DEPARTMENT OF COMMERCE WITH
INTERNATIONAL BUSINESS
HINDUSTHAN COLLEGE OF ARTS AND SCIENCE,
COIMBATORE

2. 2
CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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Definition of Condition & Warranty
Condition :
The Sale of Goods Act 1930 provides the definition for a Condition as – ““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”
Warranty :
“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”.

3. 3
CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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Condition
 A Condition forms the core of the contract i.e. considered as an essential to the
main purpose of the contract. Therefore, the repercussion would be repudiation of
the contract or claim for damages or both depending upon the breach and case.
 Breach of a Condition makes a contract voidadble on the part of non-defaulting
party to the contract.

4. 4
CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
1Example : P goes to R, a Horse dealer, and says, i want a horse which can run at a
speed of 30 km. Per hour. The Horse dealer points out a particular Horse and says,
this will suit you. P buys the Horse. Later on P finds that the Horse can run only at a
speed of 20km./Hr. There is a Breach of condition, P can repudiate the contract,
return the horse to R and get back the price.

5. 5
CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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Warranty
 A Warranty is treated as a collateral to the main purpose of a contract and
therefore, the repercussions of breach of warranty by one of the parties would be
only a claim for damages by the non-defaulting party.
 A breach of Warranty by one of the parties does not make the contract a contract
voidable and does not give any right to the non-defaulting party to repudiate the
contract.

6. 6
CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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Example : Assume that a farmer, intending to plant No-till soybeans, approaches a
seller to buy herbicide. Assume further that the buyer requests a particular herbicide
mix but the seller suggests a less expensive mix. If the chemicals fail to kill crabgrass
and the farmer has a low yield of soybeans, the farmer could sue the seller for breach
of the warranty of fitness for a particular purpose because the seller knew what the
farmer required.

7. 7
CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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 A breach of warranty by one party cannot treated as one of breach of
condition, however, a breach of a Condition by one of the parties to the
contract can be treated as a breach of Warranty.
 The Sale of Goods Act provides for the situations when a breach of a
Condition by one of the parties can be treated as breach of warranty under
a contract of sale of goods.

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CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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Those situations being: –
1. When the buyer himself waives the Condition, which gives right to the buyer to
repudiate the contract on breach of that particular stipulation; or
2. When the buyer treats the Condition as a Warranty and does not repudiate the
contract on the basis of such breach; or
3. Where the contract is non-severable and the buyer has accepted either the whole
goods or any part under the contract; or
4. Where the law itself excuses the fulfilment of a Condition.

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CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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Distinction between Condition and Warranty

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CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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Condition
 Stipulations that are essential for
main purpose of contract.
Nonfulfillment of such will mean loss
of foundation of contract. These are
termed as Conditions’.
 A contract of sale cannot be fulfilled
unless the condition to it, is fulfilled.
 In case of breach of condition, the
aggrieved party can reject the
contract.
 Breach of condition can be treated as
breach of warranty if the aggrieved
party is happy with compensation.
 Warranty is collateral to the main
purpose of contract.
 The main contract can be fulfilled
even if the warranty is not fulfilled.
 In case of breach of warranty, the
aggrieved party can only claim for
damages.
 Breach of warranty can not be
treated as breach of condition.
Warranty

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CONDITION AND WARRANTIES IN SALE OF
GOODS ACT
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Meaning of the terms
Breach : Violation of an agreement between a seller and a buyer as to the condition,
content, quality, or title of the item sold.
Stipulation : Specification
Repudiate : Reject / Disclaim / Renounce
Repercussion : Consequence, Effect, Outcome