The Sales Of

Goods Act, 1930

Conditions And Warranties
By – Yayan Aggarwal (53) Aakansha Chauhan (47)
Joshua Williams (55) Harmannat Kaur (41)
Gunpreet Singh (43) Aadi Jain (51)
Harnoor (45) Kashish (39)
 Definitons
Condition [Sec. 12 (2)] Warranty [Sec. 12 (4)]

A condition is a stipulation essential to the main "A warranty is a stipulation collateral to the
purpose of the contract, the breach of which main purpose of the contract, the breach of
gives rise to a right to treat the contract as which gives rise to a claim for damages but not
repudiated". to a right to reject the goods and treat the
contract as repudiated“
Example: A says to B, I want a 'Switzerland made
watch'. B, the watch dealer, shows him that watch. Example: A intends to buy a watch and says to B
A buys the watch but subsequently finds that watch that “I want a good watch”. B shows him and a
is made in China. This is a breach of Conditions, as watch and says that it is Switzerland made watch.
the buyer's stipulation is essential to the main A buys the watch and later finds that it was made
purpose of the contract. in China. This is a breach of Warranty, as the
buyer’s stipulation is not essential to the main
CASE LAW: "Baldry vs. Marshall (1925)" purpose of the contract.
Difference between Conditions and Warranties

Basis Conditions Warranties

1. Nature of A condition is a stipulation A Warranty is a stipulation

Stipulation essential to the main purpose collateral or subsidiary to the
of the contract. main purpose of the contract

2. Significance Condition is of vital Warranty is of lesser

significance. significance.

3. Buyer’s right in Buyer is entitled to terminate Gives right to claim damages

case of breach the contract. only.
 When Breach of Conditions be
treated as Breach of Warranty?

01 Voluntary Waiver : Where the seller commits a

breach of condition, the buyer may
(a) waive the condition, or
(b) elect to treat the breach of condition as a
breach of warranty [Sec. 13(1)].
In case the buyer waives the condition, he
cannot afterwards compel the seller to fulfil it.

02 Acceptance of Goods by Buyer : Where the

contract is not severable (divisible) and the buyer
has accepted the goods or part thereof, the
breach of any condition by the seller can be
treated as breach of warranty unless there is a
term of the contract express or implied to that
effect [Sec. 13(2)].
 Express and Implied
Conditions and Warranties

❖Conditions and warranties may be express or implied.

▪ Express conditions and warranties are those which are
expressly incorporated by the parties in the contract
they may be oral or written.
▪ Implied conditions and warranties are those which are
automatically incorporated by the law in the contract.

❖ Exclusion of Implied Conditions and Warranties.

▪ Implied condition in a contract of sale may be
cancelled or varied by
a) an express agreement; or
b) by the course of dealings; or
c) by usage of trade (Sec. 62).
 Implied Conditions

01 Condition as to Title [Sec. 14(a)]. In every contract of sale, the implied condition
is that the seller has a right to sell the goods and he will have the right to sell the goods in
case of an agreement to sell at the time when property is to pass. Where the buyer finds that
the title of the seller to the goods is defective, he can put an end to the contract.

CASE LAW: Rowland vs. Divall (1923)

Facts: R bought a second hand motor car from D and used it for four months. It was
discovered that D had no title to the car since it was the stolen one. On being compelled to
return the car to the true owner, R sued D to recover the purchase price.
Held, R was entitled to recover the entire purchase price and D was not entitled to set-off any
amount for the four months use of the car by R.

Seller cannot transfer property in the goods which are sold by infringing a patent right or
trademark. If he does so, it amounts to a breach of condition by the seller that he has a right
to sell the goods.
02 Sale by Description (Sec. 15)
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.
The rule of law contained in Sec. 15 is based on the following maxim:
"If you contract to sell peas, you cannot oblige a party to take beans. If the description of the
article tendered is different in any respect, it is not the article bargained for and the other party is
not bound to take it.” (Bowes vs. Shand, 1877).

A sale by description includes any sale in which the subject matter is identified by quality, place of
origin, mode of packing, date of manufacturing, time of dispatch or delivery, number brand etc.
For example, MP Wheat, LG Machine, Real Apple Juice, Brown Bread, etc.
Sale by goods by description may include the following situations:

a) Where the buyer has not seen the goods and relies on the description given by the seller.

CASE LAW : Varley vs. Whipp (1900)

b) Where the buyer has seen the goods, but he relies not on what he has seen but what
was stated to him.

EXAMPLE.
In an auction sale, a set of napkins and tablecloths are described as dating from the seventeenth
century. The buyer buys the set after seeing it. Subsequently he finds the set to an eighteenth-
century set. The buyer is entitled to reject the set and get back the price of the set.

c) Packing of goods may sometimes constitute a part of the description.

EXAMPLE.
A agreed to sell to B canned fruits in cases containing 30 tins each. B found that nearly half of
the cases contained 24 tins in place of 30 tins as per the agreement. B was entitled to reject the
goods as they were not according to the description.

Packing of the goods must be according to description. In case it is not so, the buyer is entitled
to reject the goods.
03 Sale by Sample (Sec. 17)
A contract for sale is a contract of sale by sample where there is a term in the contract, express
or implied, to that effect [Sec. 17(1)].
In case of a contract for sale by sample, there is an implied condition:
(a) that the bulk shall correspond with the sample in quality,
(b) that the buyer shall have the reasonable opportunity of com- paring the bulk with
the sample,
(c) that the goods shall be free from any defect rendering them unmerchantable.
The defect should however be apparent on a reasonable examination of the
sample [Sec. 17(2)].

It may be noted that this implied condition is applicable only in case of latent defects (defects
which are not visible on the ordinary examination of the sample). In case of Patent defects,
there is no breach of merchantability.

CASE LAW: Drummond vs. Van Ingen (1887)

04 Sale by Sample as Well as by Description (Sec. 15)
When the goods are sold by sample as well as by description, the implied condition is that the bulk
of goods shall correspond both with the sample and the description. When the goods supplied do
correspond only with the sample and not with description or vice versa, this amounts to a breach of
condition and the buyer is entitled to reject the goods.

CASE LAW: Nichol vs. Godts (1854)

Facts: N agreed to sell to G some oil described as 'Foreign-refined rape oil', equal to sample. N
supplied the oil though, corresponded with the sample, but which was not 'foreign refined rape oil'.
Held, G was entitled to reject it.

05 Implied Condition as to Quality or Fitness [Sec. 16(1)]

Usually in a contract of sale, there is no implied condition as to quality or fitness for any particular
purpose of goods supplied. According to the rule of 'Caveat Emptor', it is the duty of the buyer to see
and satisfy himself whether the goods purchased will be suitable for his purpose or not.
Implied condition as to quality or fitness of goods is applicable in
the following cases :
a) Where the goods sold for a particular purpose: There will be breach of implied condition as to
quality or fitness of the goods for any particular purpose, provided the following conditions are
satisfied :
(i) The buyer, expressly or implied, makes known to the seller the purpose for which the
goods are required.
(ii) The buyer relies on the skill and judgment of the seller.
(iii)The goods are of a description which are sold by the seller in the ordinary cause of
business (whether he is the manufacturer or producer or not).

b) Where the puppets made known by Implication: In certain cases, the purpose for which the goods
are required is implied in the article itself or it may be ascertained from themplied of the transaction of
the article purchased. In such a case, the buyer is not required to tell the seller the purpose of buying
the article.

CASE LAW: Priest vs. Last (1903)

 Exceptions to Implied Condition as to Quality or Fitness
Implied condition as to quality or fitness does not apply in the following cases:

a) Where the goods can be used for several purposes,

the buyer must disclose the purpose to the seller for which he requires the goods.
Otherwise, the seller will not be liable for the breach of implied condition as to quality or
fitness.

CASE LAW: Jones vs. Padgett (1890)

b) Where the goods are sold under patent or trade name,

Proviso to Section 16(1) of the Act provides :
"In case of a contract for the sale of a specific article under its patent or other trade name,
there is no implied condition as to its fitness for any particular purpose provided the buyer
has not relied on the skill and judgment of the seller.“

c) Where the buyer is suffering from an abnormality.

If the buyer is suffering from any abnormality and the same is not disclosed to the seller at
the time of purchase, the implied con- dition of fitness does not apply.

CASE LAW: *Griffiths vs. Peter Conway Ltd. (1939)

06 Condition as to Merchantability [Sec. 16(2)]
Where goods are bought by description from a seller who deals in goods of that description
(whether he is the manufacturer or producer or not), there is an implied condition that the goods
shall be of merchantable quality.
For the application of the condition as to merchantability, the following two conditions should be
satisfied:
(i) The goods should be bought by description.
(ii) The seller should deal in goods of that description.

The term 'merchantable quality' is not defined in the Sale of Goods Act. Goods are said to be of
'merchantable quality' when there are no defects in the goods which render them unsuitable for
sale. In such a case the buyer is bound to accept the goods.
For instance, Air conditioner that does not provide cooling, digital camera takes the photographs
without showing the image, washing machine that does not wash clothes etc. cannot be regarded
as merchantable.

CASE LAW: Jones vs. Just (1868)

The buyer cannot hold the seller liable for the breach of condition as to
merchantability in the following cases:
(i) Where he has examined the goods but has looked a defect which a ordinary examination
would have revealed.
(ii) Where the defect is patent (apparent or visible on the ordinary examination), but the buyer
has not examined the goods.

However, the seller will be held liable for the breach of condition as to merchantability in the following
cases:
(i) Where there are latent defects in the goods, i.e., the defects are not apparent or visible on
the proper examination of goods.
(ii) Where the packing of the goods is defective, wholly or partially. Packing of the goods is
also taken into consideration in order to judge their merchantability.

CASE LAW : *Morelli vs. Fitch Gibbons (1928)

Facts: M asked for a bottle of stone's ginger wine at F's shop, which had obtained license for the sale of
wine. While M was drawing the cork with corkscrew, the bottle broke at the neck and he was injured. Held,
M was entitled to recover damages as the bottle was not of merchantable quality.
07 Condition as to Wholesomeness
This condition is, in fact, a part of the condition as to merchantability. It is applicable in
case of eatables and provisions, which must not only be merchantable but also be
wholesome and suitable for consumption.

CASE LAW: Frost vs. Aylesbury Dairy (1949)

Facts: F purchased some milk from A, a dairy owner. The milk contained germs of
typhoid fever. F's wife took the milk and got infection of typhoid and died of it.
Held, F was entitled to recover damages.
 Implied Warranties

The implied warranties in a contract of sales are –

1. Implied Warranty of Quiet Possession[sec.14(b)]
This w a r r a n t y is an i m p l i e d assurance g i v e n t o t h e b u y e r t h a t h e s h a l l h a v e
q u i e t possession o f g o o d s w i t h o u t a n y d i s t u r b a n c e t h e t h i r d p a r t y . I f
t h e r e is a b r e a c h o f t h i s c o n d i t i o n , t h e b u y e r c a n c l a i m damages f r o m t h e
s e l l e r.

For example, i f s o me on e b u y s a c a r f r o m a d e a l e rshi p, t h e i m p l i e d

w a r r a n t y o f q u i e t possession ensures t h a t t h e b u y e r w i l l n o t f a c e
legal challenges o v e r t h e car’s o w n e r s h i p (e.g., c l a i ms f r o m a p r e v i o u s
o w n e r o r a l i e n h o l de r ) .
CAS E LAW: * Ma n s o n vs . B u r mi n g h a m ( 1 9 4 9 )
2. Implied Warranty as to free from Liability or Encumbrance
[Sec. 14(c)]

Unless a contrary intention appears from the circumstances of the case, there is an implied
warranty that the goods shall be free from any charge or encumbrance in favour of any party
not declared to the buyer before or at the time of making of the contract. If the charge is
declared to the buyer at the time of making of the contract, he will have no cause of action
against the seller for this breach of warranty

For example - If a person buys a piece of land, the implied warranty of freedom from
encumbrance guarantees that there are no hidden claims or restrictions, such as unpaid
property taxes or mortgage, which could affect the buyer ownership. Of such issues arise, the
buyer can seek compensation from the seller.
[Sec. 16 (3)]
 Doctrine Of Caveat Emptor
The term 'Caveat’ means Caution or beware; and the term ‘emptor’ means
purchaser or buyer. The of caveat emptor means 'Let the buyer beware',
Caveat emptor does mean either in law or in Latin that the buyer must take
chance, it means hat the buyer must take care.
This principle states that while buying the goods the buyer must act with a 'third
eye and ear', i.e.

i. It's a duty of the buyer to thoroughly examine the goods.

ii. In case of any default, he cannot blame anybody except himself.

iii. The seller is under no obligation to reveal the defects in the goods of which
he may be cognizant.

iv. There is no implied undertaking by the seller that he shall supply goods
which will suit buyer's purpose.
The rule of caveat emptor is applicable in the following cases:
a) Where the buyer has examined the goods, and such examination would have disclosed those
defects (Patent defects).

b) Where the goods are sold under patent or trade name, and the buyer does not rely on the seller's
skill and judgment.

c) Where seller is not the exclusive dealer of goods, i.e.., goods are sold by him privately, e.g., sale of
old computer or car. In such a case there is no implied condition as to quality or fitness.

d) Where the article can be used for several purposes, but the purpose is not brought to the notice of
the seller [Jones vs. Padgett (1890)].

e) Where a person is suffering from abnormality and the same is not brought to the knowledge of the
seller [Griffiths vs. Peter Conway Ltd. (1939)]

Thus, in all the abovementioned cases the seller will not be liable in damages

CASE LAW : Smith vs. Hughes (1871)

 Exceptions To Doctrine of Caveat Emptor

The increasing complexity of modern commerce has forced the buyer to rely on more and more upon the
skill and judgment of the seller and manufacturer. The modern law of commercial transactions has
recognized the following exceptions to the 'doctrine of caveat emptor to protect the interest of the buyers:

1) Quality or Fitness for the Buyers' Purpose.

To hold the seller liable the following three conditions must be satisfied:
i. The buyer has made known to the seller, expressly or by implication, the particular purpose for
which he requires the goods.
ii. He relies on the skill and judgment of the seller.
iii. Seller supplies the goods fit for the buyer's purpose in the ordinary course of business [Sec. 16(1)].

If the forementioned conditions are satisfied, the rule of Caveat Emptor does not apply.

2) Gods Purchased by Description.

Where the goods are purchased by description and the goods do not correspond with the
description, the rule of Caveat Emptor does not apply.
3. Goods Purchased by Sample.
Where the goods are purchased by sample, the rule of Caveat Emptor does not
apply if the bulk does not correspond with the same (Sec. 17).

4. Goods Purchased by Sample and Description.

Where the goods are purchased by sample and description and the goods do not
correspond with the sample as well as description, the rule of Caveat Emptor is
not applicable (Sec. 15).

5. Goods of Merchantable Quality.

Where the goods are bought by description from a seller who deals in the goods
of that description and the goods are found not to be of merchantable quality,
[Sec. 16(2)]. In such a case the seller cannot take the defence of the rule of
Caveat Emptor because it does not apply.
6. Wholesomeness of Goods.
Where provisions and eatables are supplied, the seller has to ensure that they are free
from adulteration and opt for human consumption otherwise the rule of Caveat Emptor
will not apply.

7. Usage of Trade Sec. 16(3).

Where the implied warranty or condition as to quality or fitness for a particular purpose
is attached by usage of trade and the seller deviates from that, the doctrine of caveat
emptor does not apply.

8. Consent obtained by fraud.

Seller is under no obligation to reveal the defects in the goods sold to the buyer but
where the seller deliberately conceals a defect in the goods, which is not visible on a
reasonable examination (latent defects), then the rule of Caveat Emptor does not
apply. In such a case the buyer is entitled to rescind and claim damages.
 Doctrine of Caveat Venditor

The rule of Caveat Emptor which means "let the buyer beware" has
been overridden by the rule of Caveat Venditor. Such change was
required of changing conditions of modern trade and commerce.

The meaning of 'Caveat' means 'beware' and 'venditor' means 'seller'.

This Doctrine focuses on making the seller beware.
As per this doctrine, the person who sells the goods is responsible for
providing valid and original details about the product to the buyer.
This law is the opposite of the doctrine of Caveat Emptor.

According to the doctrine of Caveat Venditor :

The buyer is considered as the king of market and is empowered
with sufficient rights to buy good quality products by his choice.
This law also reduces the responsibility of the buyer and makes the
buying-selling process more systematic.
 Conclusion
In summary, conditions and warranties under the Sale of
Goods Act, 1932 are important for fair and clear sales
agreements. A condition is a key term of the contract, and if
it's broken, the buyer can cancel the contract and claim
damages. A warranty is a less important term, and its breach
only allows the buyer to ask for compensation, not cancel the
deal.
These rules help protect both buyers and sellers by defining
their rights and duties. They make business dealings fair and
trustworthy while providing clear solutions if something goes
wrong. This makes the Act a vital part of trade and commerce.