Conditions and Warranties under the Indian Contract Act

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This article is written by Pooja Lakshmi, studying BBA-LLB at Bennett University, Greater Noida. In a contract of sale, the parties may take certain statements about the course of trade and stipulation of these relations can either in the form of a warranty or a condition. This article speaks about the provisions of conditions and warranties which are provided in section 11-17 of the Contract Act. Section 12 of the sale of goods act goes on explaining the distinctions between warranties and condition. Moreover, when should a condition be treated as a warranty is also explained in the same.

Keywords: warranty, condition, Indian contract act, sale of goods act.

INTRODUCTION

As every contract of sale contains stimulations or number of terms that define the quality of goods and how well it can fulfil the purpose of the buyer. These terms are called as conditions, and warranty is a written guarantee. These conditions and warranties are put into place. The conditions are made to the product to make it fair for the buyer and seller to make their part clear and not perform any breach when the parties claim a mistake in any part. The whole contract is based upon the condition which is a fundamental precondition and on other hand, warranty is a written guarantee where the seller assures to repair or replace a product which in the case shows any fault in future until a certain period. Due to these reasons, conditions are considered as the foundation of the Indian contract as an integral part of performing the contract. If a seller fails to fulfil a condition, then the buyer has an option of refusing to accept the goods or reject the contract. But in case of an open market, the buyer is responsible for checking the quality and suitability of goods before making the purchase.[1]

History

The use of the word ‘condition’ appears to have originated in the 17th century. The Sale of Goods Act, 1930 defines the term condition under section 12(2). According to it, a condition can be defined as a stipulation which is so Vital to the contract that its complete and exact performance by one party is a condition precedent to the obligation to the other party to perform his part. Opening para of Section 16 makes it clear that there is no implied warranty or condition as to the quality of fitness of goods for any particular purpose, except those specified in Sale of Goods Act or any other special law. This is the basic principle of caveat emptor i.e. Buyer be aware. However, there are certain stipulations which are essential for the main purpose of the contract of sale of goods, which go to the root of contract and non-fulfilment and these cause frustrations of contract. These are termed as conditions.

Types of Conditions

Express condition as a legal agreement states that something must exist in the contract or must be done. They are the conditions which are imperative to the functioning of the contract and are inserted into a contract at the will of both the parties. On the other hand, implied conditions are of many types. They are described in section 14 to 17 of the Sale of Goods Act 1930. Implied contracts are not particular rather they are mere assumptions made by the parties as if they are incorporated in the contract itself.

 For every contract of sale, there is a basic essential implied condition on the part of the seller. The first condition under section 14 is that one must have the title to sell the goods. If he/she has the title to sell the good, then in case of any agreement to sell, he or she will have the right to sell the goods at the time of performing a contract. Whereas, if the seller has no title to sell the given goods then the buyer may refuse or reject those goods and he or she is also entitled to recover the full price paid by him or her. In the case of thievery, the aggrieved party is entitled to recover the money as the seller has no title to sell the stolen object.[2]

Section 15 describes condition based on the description. The section says that the goods should always have a description confirming their various features. A buyer has an option either to accept or to reject a good which do not conform with its description. Section 16(2) of the Sale of Goods Act says that the goods must be of merchantable quality, that is a quality which can be accepted by a reasonable person. According to this section, a buyer has the right to examine the goods before accepting it and also if, during the examination, the defect is not revealed but within a reasonable time if the goods are found to be defective, the buyer can reject the contract even if he or she has approved the goods earlier. Implied conditions in the case of eatables must be wholesome, sound, and reasonably fit for the purpose of which they were purchased and if any problems arise after consuming the purchased item, the person can claim damages. Section 17 of the Sale of Goods Act is about a contract of sale by sample. According to this section, natural products should correspond with the sample with respect to the quality, colour, size, etc. Here the buyer is given a reasonable opportunity to compare the goods with the sample. The goods must be free from any defect rendering them and should be merchantable[3]. The goods which are supplied must always be in accordance with the description as well as the sample they provide.

Types of Warranty

A Written guarantee that is collateral to the main purpose of the contract is called a warranty. This is an additional stipulation. If a warranty is breached, the aggrieved party cannot reject the whole contract, but it can claim for damages that have happened. Whereas in the case of breach of a condition buyer can reject or return good or but in the breach of warranty the buyer cannot reject a good. These types of warranties are called expressed warranty.

Implied warranties are those warranties which are not specifically included in a contract but are assumed to be incorporated with the contract of sale. Some types of implied warranty are warranty to undisturbed possession, freedom from encumbrances, or to disclose the dangerous nature of goods sold. Section 14(2) describes the undisturbed possession that a buyer can enjoy and if later disturb at any point, can sue the seller for the breach of warranty. Freedom from encumbrance is mentioned in section 14(3), it states that the goods are free from any charge or encumbrance that are with favour to any third party which is not in the knowledge of the buyer. And if the buyer knows the fact at the time of entering the contract, he will not be entitled to any claim. Similarly, if the goods sold are inherently dangerous or are likely to be dangerous to the buyer or anyone and if the buyer was not aware of the danger associated with the product, it is the duty of the seller to warn and make the buyer aware of the danger. Any breach regarding this will only make the seller liable for danger.

In a warranty, damages can only be claimed in a case of a breach but in a condition, the whole contract may be treated as rejected. A condition is supposed to be a stipulation forming basis of the contract whereas warranty is an additional stipulation complementary to the main purpose of the contract.

Condition is basic for the formulation of a contract, but a warranty is a written guarantee for sharing the information regarding the clauses in the contract with a party.

Similarities which can be Found

Section 13 states how the breach of condition will become similar to the level of breach of warranty. A condition can be considered as a warranty only if the condition is considered as a warranty by the buyer or the buyer on his will treat the breach of the condition as a breach of warranty. In both cases, the contract cannot be rejected but the damages can be claimed only in the case of warranty.

CONCLUSION

At the time of purchasing or selling a good, seller and buyer must put forward the conditions and the method of payment, quality delivered, and the quantity of the item. This information is necessary and can provide warranty and terms and conditions based on the same. In a warranty only damages can be claimed in case of a breach but in a condition the whole contract may be treated as rejected. A condition is supposed to be a stipulation forming basis of contract whereas warranty is an additional stipulation complementary to the main purpose of the contract. These stipulations are considered as conditions or warranty based on the various cases and their facts. It protects the right of the parties in a case of breach of any contract and it prevents a breach of contract.

BIBLIOGRAPHY

  • J W Carter, C Hodgekiss. Conditions and Warranties: Forebears and Descendants Sydney L. Rev, volume 35, issue 8
  • The Sale of Goods Act
  • The Indian Contract Act
  • Avtar Singh, Law of Sale of Goods
  • Morley v. Attenborough, (1849) 3 Exch 511.
  • Rowland v Divall [1923] 2 KB 500
  • Mark R. Bandsuch, Warranty. Britannica

[1] Morley v. Attenborough, (1849) 3 Exch 511.

[2] Rowland v Divall [1923] 2 KB 500

[3] Mark R. Bandsuch, Warranty. Britannica, <www.britannica.com/topic/warranty> n

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