Condition – warranty

Define and explain the terms ‘condition’ and ‘warranty’. 
Distinguish between the two. State the implied conditions and implied warranties.
Explain the implied conditions & warranty under the 'Sale of Good Act'?
A contract of sale of goods contains various terms regarding the quality of the goods, the price and mode of its payment etc. All these terms are not of equal importance. Some of these may be major terms which go to the very root of the contract and their breach may frustrate the very purpose of the contract, while other terms may be minor terms which are not so vital that their breach may seem to be breach of contract. These major terms are called conditions and the minor terms are called warranties.
Definition of Condition: A condition is a stipulation essential to the main purpose of the contract, the breach of which gives the aggrieved party a right to repudiate the contract itself. (Section 12-2)
It can be seen from the definition that condition forms the very basis of the contract, the breach of which causes an irreparable damage to the aggrieved party and the aggrieved party can cancel the whole contract. He may additionally prosecute for damages also for the non-performance of the contract.
Definition of Warranty: A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives the aggrieved party a right to sue for damages only, and not to avoid the contract itself.
A warranty is therefore a stipulation in a contract of sale which is of secondary importance as compared to a condition. The definition makes it clear that effect of breach of warranty is not the same as the effect of breach of condition. In other words, breach of warranty causes only such harm to the transaction which can be compensated by payment of damages.
Example of condition: If A buys a horse from B, pointing out to B that he wants a horse which runs at a speed of 50 k.m. per hour. B offers to A a particular horse commending that the horse would serve his purpose. If the horse cannot run at the said speed, it is breach of condition because the ability of the horse to run at the specified speed was made essential stipulation of the contract.
Example of Warranty: If in the above example, A asks only for a good horse and B sells to him one saying that the horse is a good one and can run at a speed of 50 km per hour, then the speed of the horse is only a warranty and not a condition. B stated about the speed of the horse without being asked for the same and as such the speed of the horse was not essential for the contract.
Difference between Condition and Warranty
1. As to significance: A condition is a stipulation which is essential to the main purpose of the contract, whereas a warranty is stipulation which is collateral to the main purpose of the contract.
2. As to breach: The breach of a condition gives the aggrieved party the right to repudiate the contract and also to claim damages, whereas the breach of warranty gives the aggrieved party a right to claim damages only. 3. As to treatment: Breach of condition may be treated as breach of warranty, but breach of warranty cannot be treated as breach of condition. 
The Implied Conditions:
Conditions and warranties in a contract can be either expressly provided or they can be implied. The terms which are specifically incorporated in a contract are called Express stipulations whereas the stipulations which the law assumes to be there in the contract are called Implied stipulations. The stipulations which are essential to every contract though not expressly provided for in the contract are therefore called the implied conditions. Such implied conditions are as follows:
1. Condition as to title: In a contract of sale, there is an implied condition on the part of the seller that in case of outright sale, he has the title to the goods i.e. right to sell the goods and in case of an agreement to sell, he will have the right to sell the goods when the goods are to pass to the buyer. 2. Sale by Description: Where there is contract of sale of goods by giving the description, there is an implied condition that the goods shall correspond with the description. 3. Sale by Sample: When, under a contract of sale, goods are to be supplied according to a sample agreed upon, the implied conditions are:

a.       that the bulk shall correspond with the sample in quality;

b.      that the buyer shall have a reasonable opportunity of comparing the bulk with the sample;

c.       that the goods shall be free from any defect rendering them unmerchantable which would not be apparent on reasonable examination of the sample. In other words, there shall not be any latent or hidden defect in the goods.

4. Condition in sale by sample as well as by description: When the goods are sold by sample as well as by description, there is an implied condition that the bulk of the goods shall correspond both with the sample and with the description. If the goods supplied correspond with sample and not with the description or vice versa, the buyer is entitled to reject the goods.
5. Condition as to fitness or quality: Normally, it is for the buyer to satisfy himself that the goods which he is purchasing are of the quality required by him. In case he is buying the goods for a specific purpose, it is for him to ensure that the goods serve the purpose for which they are bought. This is the principle of Caveat Emptor. Even when it is so, there is an implied condition on the part of the seller that the goods supplied shall be reasonably fit for the purpose for which the buyer wants them, if the following conditions are satisfied:

a.  the buyer, expressly or impliedly, should make known to the seller the particular purpose for which the goods are required; and

b. the buyer should rely on the seller’s skill or judgment; and

c.  the goods sold must be of a description which the seller deals in the ordinary course of his business, whether he is the manufacturer or not.

6.  Condition as to merchantability: This condition is implied only where the sale is by description. This implied condition is in addition to the condition which requires the goods to correspond to the description. The term merchantable quality means that the goods are of such quality and in such condition that a reasonable man, acting reasonably, would accept them under the circumstances of the case. For the implied condition of the goods being of merchantable quality, the following essentials must be present:

a.       the seller must be a dealer in goods of that description, whether he be the manufacturer or not; and

b.      the buyer must not have any opportunity of examining the goods or there must be some latent defect in the goods which would not be apparent on reasonable examination of the same.

7. Condition as to wholesomeness: This condition is applicable in the sale of eatables. In such case, the goods must not only answer the description and be of merchantable quality, but must also be wholesome, i.e. fit for human consumption.
The Implied Warranties
As already noted, implied warranties are those which are assumed to be present in every contract of sale even if they are not specifically mentioned by the parties. They are two:
1. Warranty of quiet possession: Unless otherwise agreed by the parties, there is an implied warranty that the buyer of goods shall enjoy quiet possession of the goods and this right shall not be disturbed either by the seller or any other person. If this right is disturbed, the buyer is entitled to claim damages from the seller.
For example, where one joint owner of goods sells the goods without the consent of the other, the buyer will not get a good title to the goods. The seller may subsequently pay off the joint owner and pass on a clear title to the buyer. Here, there is no breach of condition but breach of warranty because the buyer’s right of peaceful and quiet possession is violated. Hence, the buyer, though does not return the goods, yet can claim damages from the seller for disturbance in his quiet possession. 2. Warranty of freedom from encumbrance: It is the duty of the seller to bring to the notice of the buyer if a charge or claim in favour of any third person exists on the goods sold. If the seller does not disclose any such charge, there is an implied warranty that the goods are free from any charge or encumbrance. If there is any charge on the goods not disclosed to the buyer at the time of sale and the buyer has to incur expenses to meet the charge, he can recover the same from the seller.