Introduction :

In a contract of sale of goods, the seller makes certain statements or representations ensuring specific and proper performance of the contract. Such representations may be either in the form of conditions or warranties. Whether the stipulation is a condition or warranty depends upon the circumstances of the case. Section 11 to 17 of The Sale of Goods Act provides provisions relating to “Conditions & Warranties’. Section 12(2) of The Sale of Goods Act defines ‘Condition’ and section 12(3) defines ‘Warranty’.

Stipulation as to time : Section 11.

Before defining the ‘Conditions & Warranties’, which relates to a stipulation in a contract of sale with reference to goods, section 11 provides provision of a stipulation as to time with reference to section 55 of The Indian Contract Act. Section 11 of the Sale of Goods Act contemplates that, unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale. The question whether time is the essence of the contract depends on the terms of the contract.

As regards the time for performing any other part of the contract, whether the stipulationas to time is of essence of the contract or not, one has to refer to and construe the terms of the particular contract.

Condition and Warranty : Stipulation with reference to goods : Section 12

(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.

(2) A condition is 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.

(3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated.

(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.

Whatever the parties say, statements exchanged during the course of negotiation leading to the formation of the contract may or may not become the part of the contract. These statements may be classified either as the term of the contract or as mere representation not forming the term of contract. If a statement is a mere representation which cannot be called a term of a contract, it cannot be either a condition or a warranty. It is only if it is a term of a contract, then it can be either a condition or warranty.

Condition v. Warranty

In the context of the Sale of Goods Act, 1930, a condition is a foundation of the entire contract and integral(inbuilt) part for performing the contract. The breach of the conditions gives the right to the aggrieved party to treat the contract as repudiated. In other words, if the seller fails to fulfil a condition, the buyer has the option to repudiate the contract or refuse to accept the goods. If the buyer has already paid, he can recover the prices and also claim the damages for the breach of the contract.

For example, X wants to buy a horse from Y , which can run at a speed of 60 km per hour. Y shows a horse and says that this horse is well suited for you. X buys the horse. Later on, he finds that the horse can run only at a speed of 40 km/hour. This is the breach of condition as the requirement of the buyer is not fulfilled.

Warranty is the additional stipulation and a written guarantee that is collateral to the main purpose of the contract. The effect of a breach of a warranty is that the aggrieved party cannot repudiate the whole contract however, can claim for the damages. Unlike in the case of breach of condition, in the breach of warranty, the buyer cannot treat the goods as repudiate.

For example, X promises to supply visiting cards to Y on 1^st January. X supplies on 4^th January. Y cannot refuse, since they can be used even after 4^th. However Y can claim damages.

Important distinctions between Condition and Warranty :

1. Condition is a stipulation, essential to main purpose of the contract. Warranty is a stipulation, collateral to the main purpose of the contract.

2. Breach of condition gives rise to repudiate the contract and claim damages. Breach of warranty does not give rise to repudiate the contract, but gives rise to claim damages.

3. In certain cases, breach of condition may be treated as breach of warranty (section 13). But a breach of warranty cannot be treated as breach of condition.

Conclusion :

At the time of selling or purchasing goods, both the buyer and seller put forth some preconditions with regards to the mode of payment, delivery, quality, quantity and other things necessary. These stipulations are either considered as condition or warranty differing from case to case. These concepts are necessary to be understood as it protects the rights of parties in case of breach of the contract. 

The remedies of the buyer arising from a breach by the seller of a condition and a breach of a warrantly are different. In both the cases the buyer is entitled to damages. But in the case of a breach of a condition he has the option of another remedy, namely, of treating the contract as repudiated and rejecting the goods altogether, provided he has not accepted the goods or any part thereof. (Reference section 13)

When condition to be treated as warranty (section 13)

A condition may be treated as warranty under the following circumstances:

1. Voluntary waiver : A contract of sale may be subject to a condition to be fulfilled by the seller. The buyer may waive the condition voluntarily, or he may treat the breach of such condition as a breach of warranty…section 13(1)

2. Contract severable : 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…..section 13(2)

3. Impossibility of performance : section 13(3) saves the right of the seller, in appropriate cases, to rely upon the impossibility as an excuse to himself, if sued by the buyer. This sub section has reference to section 56 of The Contract Act.

The Conditions and Warranties may be express or implied

When the conditions and warranties are definitely stated in the contract, they are called express conditions and warranties. They protect the interest of the buyer from the principle of ‘Caveat Emptor’. If they are inferred from the circumstances of the case, they are called ‘implied conditions and warranties’.

Provisions relating to ‘Implied Conditions and Warranties’ are provided in section 14 to 17 of The Sale of Goods Act, 1930.