The Sale of
Goods Act, 1930
Conditions & Warranties (Sec. 11-17)
In a contract of sale, parties make certain stipulations, i.e., agree to certain terms regarding the quality of the goods, the price and the mode of its payment, the delivery of goods and its time and place. These stipulations are called either Conditions or Warranties.
Stipulation=Terms/Representations/Circumstances
All the stipulations in a contract of sale are not of equal importance. Some of them are essential to the main purpose of the contract which is called “conditions” and some are collateral to the main purpose of the contract which is called “warranties”.
therefore, these stipulations can be of two types:
- Conditions
- Warranties
Stipulations as to time
Stipulations as to time in a contract of sale fall under the following two heads:
1. Stipulation relating to time of delivery of goods
2.
Stipulation relating to time of payment of the price
Stipulation relating to time of delivery of goods
If time is fixed for delivery of the goods and the seller makes a delay, the contract is voidable at the option of the buyer.
In the case of late delivery, therefore, the buyer may refuse to accept the delivery and may put an end to the contract.
Stipulation relating to time of payment of the price
The general
rule is that ‘time of payment is not deemed to be the essence of the contract’ unless
a different intention appears from the terms of the contract (sec. 11).
Therefore,
if the buyer makes a delay in the payment of the price, the seller cannot avoid
the contract on that account but he can only claim compensation for the same.
The parties are, however, free to express a different intention in their contract. They may make the time of the payment of
the price as the essence of the contract.
In the following case, the time is considered to be the essence of the contract.
Where the
parties have expressly agreed to that it is a condition
Where the
delay operates as injury to the party
Where the
nature and necessity of the contract requires it to be a condition
Conditions
& Warranties (Sec. 11-17)
Sec. 12(2)
defines a ‘condition’ as, ‘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’ (denied),
Sec 12(3) defines a ‘warranty’ as, ‘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 treat the contract as repudiated’ .
Effect of Breach
The effect
of a breach of a ‘condition’ is to give the aggrieved party a right to treat
the contract repudiated, i.e., if price has been paid, the buyer can claim the
refund of price plus damages for breach and refuse the goods.
In case of breach of ‘warranty’, only damages can be claimed, i.e., the buyer must accept the goods and claim damages for the breach of warranty.
Example: 1
Say ‘X’ wants to purchase a car from ‘Y’, which can have a mileage of 20 km/lt. ‘Y’ pointing at a particular vehicle says “This car will suit you.”
Later ‘X’
buys the car but finds out later on that this car only has a top mileage of 15
km/ liter.
This
amounts to a breach of condition because the seller made the stipulation which
forms the essence of the contract.
In this
case, the mileage was a stipulation that was essential to the main purpose of
the contract and hence its breach is a breach of condition.
A man buys a particular horse which is warranted quiet to ride and drive. If the horse turns out to be vicious, the buyer’s only remedy is to claim damages.
But if instead of buying a particular horse, a man asks a dealer to supply him with a quiet horse and the dealer supplies him with a vicious one, the stipulation is a condition, and the buyer can return the horse and can also claim damages for breach of contract (Hartley vs Hyman)
The
illustrations are a clear proof of the fact that an exactly similar term may be
a condition in one contract and a warranty in another depending upon the
construction of the contract as a whole
Example,
A agrees to
supply a suit to B by 15th November, which the latter wants to wear on the day
of his marriage to be held on 16th November, the time of the delivery of the
suit is a condition.
On the other hands, if the suit which A agrees to deliver to B by 15th November is
required by the buyer to be used in the following winter season, the time of
delivery is a warranty.
The court has to look to the intention of the parties by referring to the terms of the
contract and the surrounding circumstances to judge whether a stipulation is a
condition or a warranty
When breach
of Condition is to be treated as a breach of Warranty?
Section 13 deals with cases where a breach of condition is to be treated as a breach of warranty, as a consequence of which the buyer loses his right to rescind (repudiate) the contract and has to be content with a claim for damages only.
These cases are as follows:
(1) Voluntary waiver by buyer:
Although on
a breach of condition by the seller, the buyer has a right to treat the
contract as repudiated and reject the goods, but he is not bound to do so
He may
instead elect to waive the condition, i.e., to treat the breach of
condition as a breach of warranty and accept the goods and sue the seller for
damages for breach of warranty
Example:
A agrees to supply B 10 bags of
first quality sugar @ Rs. 1625 per bag but supplies only second quality sugar,
the price of which is Rs. 1500 per bag. There is a breach of condition and the
buyer can reject the goods. But if the buyer so elects, he may treat it as a
breach of warranty, accept the second quality sugar and claim damages @ Rs. 125
per bag.
Where a
contract of sale is not severable (indivisible) and the buyer has accepted the
goods or part thereof,
The idea
behind the provision is that when the buyer has a choice of either accepting or
rejecting goods and he chooses to accept them, his right of rejection can no
more be exercised.
Express & Implied Conditions & Warranties
Express condition or warranty:
These may be of any kind that the parties
may choose to agree upon, eg, it may be agreed that delivery of goods shall be made
or taken on or before a certain date.
Implied conditions and warranties:
They are deemed to be incorporated by law in
every contract of sale of goods unless the terms of the contract show a
contrary intention
Implied conditions
- Condition as to title (sec. 14)
- Sale by description (sec. 15)
- Condition as to quality or fitness for buyer’s purpose [sec. 16(1)]
- Condition as to merchantable quality [sec. 16(2)]
- Condition as to wholesomeness
- Implied condition in the case of sale by sample (sec. 17)
- Implied condition in the case of sale by sample as well as description (sec. 15)
1. Condition as to title (sec. 14(a))
Seller must
be the owner of goods
Seller must
not infringe a trade mark or patent.
Seller
acquire the right to sell:
(a) In a
contract of sale, the seller acquire the right to sell at the time of making
the contract.
(b) In a
agreement to sell, the seller shall acquire the right to sell when the property
in goods shall be in his same.
Consequences
of Breach of Condition as to Title. The aggrieved party has the right to cancel
or repudiate the contract.
the
plaintiff purchased a motor car from the defendants and used the same for
several months.
The
defendant had no title to the car and, therefore, the plaintiff was compelled
to give it up to the true owner.
The
plaintiff sued the defendant to recover back the price which he had already
paid.
It was held
that even though the buyer had used the car for some months, he was entitled to
recover back the whole of the price paid by him.
2. Sale By
Description (sec-15)
When the
goods are sold by given the description, there is an implied condition that the
goods are sold shall the description so given.
Consequences
of breach: Where the goods supplied by the seller are not according to the
description given, then the seller commits a breach of condition and therefore,
the buyer can reject the goods and repudiate the contract. This includes the
following situations :
(i) Where the buyer has not seen the goods and relies on the description given by the seller.
Here the goods should correspond the description so given else it shall amount
to breach of condition and the buyer can repudiate the contract.
(ii) Where buyer
has seen the goods but relies on description stated. It may be case that
although the buyer saw the goods he bought, but still relied on the description
given by the seller about the goods. In such cases also, if the description
does not correspond with the goods, it amount to breach of condition in the
contract.
Example-
The
internet website of a leading photocopying company offered a “2003 Machine”, in
new condition and with original parts. Mr. Manzoor placed an order for the
same, for his shop. When the machine arrived, it was found that the stand was
partly broken, the glass was not original and a few switches were not
functioning.
Mr. Manzoor
was entitled to reject the machine since the goods (viz., the photocopy
machine) did not correspond with the description on the website.
3. SALE BY SAMPLE (Sec 17)
When goods
are sold by sample, there is an implied condition that:
the bulk
shall correspond with the sample.
The buyer
shall have reasonable opportunity to compare bulk with the sample.
The goods
shall be free from any defect.
4. SALE BY SAMPLE AND DESCRIPITION. (Sec 15)
Where the
goods are sold by showing a sample and also by giving description, the goods
must correspond both to the sample shown and the description stated.
Where the
goods corresponding with the sample but do not corresponding with the
description or vis-a-vis, it shall amount to breach of condition and the buyer
can repudiate the contract.
EXAMPLE:-
5.CONDITION AS TO QUALITY OR FITNESS (Sec 16)
Generally:
there is no implied condition or warrantee as to fitness.
(The rule of Caveat Emptor) (Read it also)
But Where: the buyer needs goods for a special purpose and
a) buyer
tells that purpose to seller.
b) The
buyer relies on skill and judgment to the seller.
c) The
seller deals or trades in similar goods.Then: it is an implied conditions that
the goods sold should serve the purpose of serve.
An order placed for some cart horses to be used for carriage purpose. The horses supplied were the race horses unfit for the carriages. These is a breach of conditions.
1. If the
buyer suffers from an abnormality:-
If buyer
has some abnormality, then such abnormality should be made known to the seller
at the time of sale, else the seller shall not be liable. If the buyer suffers
a harm due to his over sensitiveness, then the seller can not be blamed for it.
Example-Skin disease
2. If the buyer purchases a product under a TRADE MARK or PATENT:-
6. CONDITION AS TO MERCHANTABILITY- U/S 16(2)
When Goods
are sold by description and the seller trades in the similar goods. then:
merchantability means:
[i] the
goods should be fit for consumption.
[ii] the
goods should not be injurious when used.
[iii] the
goods should not infringe a trade mark or a patent.
(If the goods are not saleable in the market as the goods of a certain description, they are not of merchantable quality.)
7. Condition as to wholesomeness
Wholesome: Free from any defects which render them unfit for
human consumption.
Implied Warranties
1) WARRANTY AS TO QUIET POSSESSION: U/S 14(B)
2) WARRANTY OF FREEDOM FROM CHARGES OR ENCUMBRANCES :
The goods
should not be subject to any charge or a right in favor of a third party. If
there is a charge or encumbrance on the goods sold and the buyer has to
discharge the same, he is entitled to get compensation for the same from the
seller.
3) WARRANTY OF DISCLOSING THE DANGEROUS NATURE OF GOODS TO THE INGNORANT BUYER
Comments
Post a Comment