Theoretical overview
Condition and warranty can be defined as stipulations, obligations or provisions directly associated with goods or services that buyers and sellers impose on each other.
A condition is the event that should be performed before the completion of another action.
According to section 12(1) stipulation in a contract of sale of goods may be a condition or warranty.
According to section 12(2) a condition is stipulation essence to the main purpose of the contract , the breach of which give rise to a right to treat the contract as repudiated.
Essential to condition
- It is the essence to main purpose of the contract.
- The non fulfilment of condition cause irreparable damages to the aggrieved party.
- the breach of condition gives the right to the aggrieved party to rescind the contract & recover damages.
For example: Ram goes to a hours trader and says that he wants to buy a horse that can run at 40km an hour. The trader gives him a horse and says that the horse will run as per ram’s requirement. Here the horse being run fast is the essential condition of the contract. If the horse is not that fast a runner as ram stipulated then he can file suits for damages against the trader but also repudiate the contract.
Warranty:- according to section 12(3) warranty is stipulated collateral to the main purpose of the contract, breach of which gave right to claim damages but not to right to return the goods and not to treat the contract as repudiated.
Essentials of the warranty:-
- it is collateral to the main purpose of the contract.
- Breach of warranty causes damages to the aggrieved party and does not cause effect to the main purpose.
- The aggrieved party can only claim the damages of breach of warranty can not repudiate the contract.
For eg: Karan purchase a car from Jai with a warranty for one year for defective parts from the original date of purchase. After 6 months Karan found that the horn is not working properly. Here, the manufacturer can get the horn repaired or can replace it with a new horn. Right gets the right to claim for the damages.
When a condition can be considered as warranty:
- Voluntary Waiver of Condition [Section 13(1)]: – Where the contract of sale is subject to any condition to be fulfilled by the seller, and the seller failed to fulfil the condition then the buyer may waive the condition or elect to consider the breach of the condition as a breach of warranty. If the buyer once decide to waive the condition later he cannot insist the seller to fulfil the condition.
- Acceptance of Goods by Buyer [Section 13(2)]: – Where the contract of sale cannot be severed and the buyer has accepted the goods or part thereof, breach of any condition fulfilled by the seller can only be regarded as a breach of warranty and not the breach of condition.
- Conversion of Condition into Warranty: – Where the buyer decide to convert the breach of condition into breach of warranty, e.g. He claims damages rather than rejecting the contract.
Important difference
| condition | Warranty |
| A condition is an obligation which requires being fulfilled before another proposition takes place | A warranty is a surety given by the seller regarding the state of the product. |
| Section 12(2) of the Sale of Goods Act, 1930 defines Condition. | Section 12(3) of the Sale of Goods Act, 1930 defines Condition |
| Condition is basic for the formulation of the contract. | It is a written guarantee for assuring the party. |
| The whole contract may be treated as repudiated. | Only damages can be claimed in case of a breach. |
| Repudiation, as well as damages, can be claimed. | Only damages can be claimed. |
Relevant sections
- Section 12(1) defines stipulations
- section 12(2) a condition is stipulation essence to the main purpose of the contract , the breach of which give rise to a right to treat the contract as repudiated.
- section 12(3) warranty is stipulated collateral to the main purpose of the contract, breach of which gave right to claim damages but not to right to return the goods and not to treat the contract as repudiated
- section 13(1) voluntary waiver of the condition
- section 13(2) acceptance of goods by buyer
important case law
Baldry V. Marshall:-
Baldry purchase a car from Marshall with a condition that the car should be suitable for touring purposes. Later Baldry found that the car is not suitable for the touring purposes. Held the suitability of car for touring purpose was so imp that its non-fulfilment defect the very purpose. Hence Baldry could return the car and get back the price.
Points to remember
- Condition and warranty can be defined as stipulations.
- stipulation in a contract of sale of goods may be a condition or warranty.
- condition is stipulation essence to the main purpose of the contract , the breach of which give rise to a right to treat the contract as repudiated.
- warranty is stipulated collateral to the main purpose of the contract, breach of which gave right to claim damages but not to right to return the goods and not to treat the contract as repudiated.
