UNIT 2: CONDITIONS &

WARRANTIES
1.The Sale of Goods Act states that a stipulation (or
term) in a contract of sale with reference to goods
may be a condition or a warranty.

STIPULATION :
Representations made

CONDITION: Essential to WARRANTIES: Collateral

the main purpose of the to the main purpose of
Contract. the Contract.
1. Condition :
 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.
 For example, A wants to buy a car which can give
a mileage of 20 kms/litre. B, the car dealer, points
out at a particular car and says “this car will suit
you”. A buys the car. But later on he finds that the
car is giving a mileage of only 10 kms/litre. There is
a Breach of Condition, because the stipulation
made by B forms the very basis of the contract.
2. Warranty:

 A warranty is stipulation collateral to the main

purpose of the contract.
 The breach of which give rise to claim for damages
but not a right to reject the goods and treat the
contract as repudiated.
 WHEN CONDITION TO BE TREATED AS
WARRANTY
1. Where the buyer altogether waives the performance of the
condition. A party may for his own benefit, waive a stipulation. It
should be a voluntary waiver by buyer.
2. Where the buyer elects to treat the breach of the conditions, as
one of a warranty. That is to say, he may claim only damages
instead of repudiating the contract. Here, the buyer has not
waived the condition but decided to treat it as a warranty.
3. Where the contract is non-severable and the buyer has accepted
either the whole goods or any part thereof.
4. Where the fulfilment of any condition or warranty is excused by
law by reason of impossibility or otherwise
 Implied conditions
Implied Conditions are presumed by law to be
present in the contract.
It should be noted that an implied condition may be
negated or waived by an express agreement.
 Implied Conditions
1. Condition as to title
2. Condition as to description
3. Sale by sample
4. Sale by sample as well as by description
5. Condition as to quality or fitness
6. Condition as to merchantability
7. Condition as to wholesomeness
 Implied Warranties

1. It is a warranty which the law implies into the contract of

sale.
2. In other words, it is the stipulation which has not been
included in the contract of sale in express words.
3. It is always included in contract, unless expressly
excluded by the express agreement of the parties.
4. These may also be excluded by the course of dealings
between the parties or by usage of trade
 Implied Warranties
1. Warranty as to undisturbed possession
2. Warranty as to non-existence of encumbrances
3. Warranty as to quality or fitness by usage of trade
4. Disclosure of dangerous nature of goods
DOCTRINE OF CAVEAT EMPTOR
1. When sellers display their goods in the open market, it is
for the buyers to make a proper selection or choice of the
goods.
2. If the goods turn out to be defective, he cannot hold the
seller liable.
3. The seller is in no way responsible for the bad selection of
the buyer.
4. The seller is not bound to disclose the defects in the goods
which he is selling.
 Exceptions to Caveat Emptor
1. Fitness as to quality or use:
i. The buyer makes known to the seller, the particular purpose for which goods
are required
ii. So as to show that he relies on seller’s skill or judgement, and
iii. the goods described are in the course of business of the seller
iv. It is the duty of the seller to supply goods which would reasonably fit for the
said purpose.
 The buyer need not tell
If the article can be the seller the purpose for
used only for one which he required the
particular purpose goods.

The buyer should tell the

If the article can be seller the purpose for which
used for a number of he requires the goods, if he
purposes wants to make the seller
responsible.
 Timber was purchased for the express
purpose of using it as railways sleepers and
when it was found to be unfit for the
purpose, the Court held that the contract
could be avoided.
 Goods purchased under patent or brand name: There is
2.
no implied condition that the goods shall be fit for any
particular purpose.
3. Goods sold by description:
Where the goods are sold by description there is an implied
condition that the goods shall correspond with the description.
If it is not so, then seller is responsible. The rule of Caveat
emptor is not applicable.

4. Goods of Merchantable Quality:

Where the goods are bought by description from a seller who deals
in goods of that description there is an implied condition that the
goods shall be of merchantable quality.
The rule of Caveat Emptor is not applicable.

Note: If the buyer has examined the goods and the defects would
have been revealed by such examination, then this rule would be
applicable. The seller will not be held responsible.
5. Sale by sample:
i) If goods are bought by sample, the bulk has to correspond with the
sample.
ii) If it doesn’t correspond, the rule of Caveat emptor doesn’t apply.

6. Goods by sample as well as description:

The rule Caveat Emptor is not applicable if goods doesn’t correspond
to either or both sample and description.

7. Trade Usage:
An implied warranty or condition as to quality or fitness for a particular
purpose may be annexed by the usage of trade and if the seller deviates
from that, this rule of Caveat Emptor is not applicable.
8. Seller actively conceals a defect or is guilty of fraud:

The seller actively conceals a defect or is guilty of fraud and

the same could not be discovered by the buyer on a
reasonable examination, the rule of caveat emptor will not
be applicable.

The contract can be avoided and damages can be claimed.