Condition and Warranty - Meaning and Differences, Sales of Goods Act' 1930

Sale of Goods Act' 1930 Notes
Business Laws Notes B.Com 1st & 2nd Sem CBCS Pattern 
 

 ‘Condition’ and ‘Warranty’

In a contract of sale, the subject matter is ‘goods’. There are millions of sale transactions which occur in the normal course, all around the world. There are certain provisions which need to be fulfilled because it is demanded by the contract. These prerequisites can either be a condition and warranty. The condition is the fundamental stipulation of the contract of sale whereas Warranty is an additional stipulation.

Meaning of Condition under Sale of Goods Act, 1930

Section 12(2) states that a condition is a stipulation which is essential to the main purpose of the contract. The breach of a condition gives rise to a right to treat the contract as repudiated or broken. So according the above definition it is clear that condition is very essential for the performance of a contract. The breach of condition will be regarded as the breach of the whole contract.

Example: A buys from B hair oil advertised as pure coconut oil. The oil turns out to be mixed with herbs. A can return the oil and claim the refund of price.

Meaning of Warranty under Sale of Goods Act, 1930

Section 12(3) states that a warranty is a stipulation which is collateral to the main purpose of the contract. The breach of a warranty gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated. The above definition shows that for the implementation of a contract warranty is not essential. For the breach of warranty only damages can be claimed.

Example: A while selling his car to B, stated the car gives a mileage of 12 kms per litre of petrol. The car gives only 10 kms per litre. B cannot reject the car. It is breach of warranty. He can only claim damages for the loss due to extra consumption of petrol.

Difference between Condition and warranty

Basis of Difference

Condition

Warranty

Definition

A stipulation which is essential to the main purpose of the contract.

A stipulation which is collateral to the main purpose of the contract.

Result of Breach

The aggrieved party can terminate the contract due to breach.

The aggrieved party cannot terminate the contract.

Remedy

The aggrieved party can terminate the contract, claim damages or treat it as breach of warranty.

The aggrieved party cannot terminate the contract but can only claim damages.

Treatment

A breach of condition can be treated as a breach of warranty.

A breach of warranty cannot be treated as breach of condition.

Link with contract

It is directly associated with the objective of the contract.

It is a subsidiary provision related to the object of the contract.

When condition to be treated as warranty.

a)       Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated.

b)      Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect.

c)       Nothing in this section shall affect the case of any condition or warranty fulfillment of which is excused by law by reason of impossibility or otherwise.

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