condition & warranties
TRANSCRIPT
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Condition
A condition is a stipulation essential tothe main purpose of the contract, thebreach of which gives rise to treat the
contract as repudiated.
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Warranty
A warranty is a stipulation collateral to the mainpurpose of the contract, the breach of whichgives rise to a claim for damages but not to aright to reject the goods and treat the contractas repudiated.
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Consequences /remedies for breach
of condition
Repudiation of contract: The buyer canrepudiate the contract.
Waive the condition: The buyer has anoption to waive the condition. Once he
waives the condition, he cannot
afterwards insist on its performance.
Reject the goods: The buyer can rejectthe goods.
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Option to treat condition as warranty and claimdamages: Buyer has the option to treat the breach ofcondition as a breach of warranty. In such a case, heis entitled to claim damages for loss caused due to
breach of condition. Compulsion to treat the condition as warranty and
to claim damages: In such a cases a buyer iscompelled to treat the conditions as a breach ofwarranty, the buyer may sue the seller for damages for
the same. No remedy when the seller is excused by law:
Where the fulfillment of a condition is excused by lawby reason of impossibility or otherwise, the buyer shallhave no remedy against the seller for the breach of thecondition.
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Consequences/remedies of breach
of warranty
Claim for damages: The buyer cannotrepudiate the contract. He cannot even
reject the goods. He can claim damages
for the breach of warranty.
Right of diminution or extinction ofprice: The buyer may diminish or extinct
the price of goods by the amount ofdamages.
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Refuse to pay price: The buyer mayrefuse to pay price altogether if the loss
is more than the price.
Sue for excess loss: The buyer mayalso sue for the amount of damages
which exceeds the price of the goods.
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When condition to be treated as
warranty
Voluntary waiver:
Waiver may be express or implied.
A buyer has a right to waive or give upany condition of contract of sale.
If he waives any condition, he agrees to
accept defective goods. It should be noted that a party may
always waive a condition which is for
own benefit.
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Voluntary election:
A buyer has an option to elect the breach of a
condition as breach of warranty.
If a buyer elects this option, he can claim onlydamages and loses his right to treat the contract
as repudiated.
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Compulsory treatment:
Where the contract is not severable and thebuyer has accepted whole or any part of the
goods, the breach of any condition of suchcontract can only be treated as breach ofwarranty.
The buyer has no option to repudiate the
contract but can claim damages unless thereis a term of the contract to that effect.
The term may be express or implied.
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Types of condition and warranties
In contract of sale, conditions and warranties
may be of two types:
Express conditions and warranties: These are
those conditions and warranties which areexpressly agreed upon by the parties in the
contract of sale.
Implied condition and warranties: These are
those warranties which are implied by the law
or imposed by the law on the seller.
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Implied condition
Following are the implied conditions incorporatedin the sales of goods act:
Condition as to title:
In a contract of sale, there is an impliedcondition on the part of the seller that
1)In case of sale, he has a right to sell the goodsand
2)In case of agreement to sell, he will have aright to sell the goods at the time when theproperty is to pass.
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Condition as to description:
Where there is a contract for sale of goods bydescription, there is an implied condition that
the goods shall correspond with thedescription.
The description may include physicalcharacteristics like class or grade, trade
marks, brand name label, etc.. If the goods are not according to the
description then the buyer has full right toreject the goods tendered.
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Condition as to sample:
When the sale is made by showing a
sample, the implied condition is that the
goods supplied shall be of the kind and
quality as the sample is.
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Condition as to sample as well as
description:
Where the goods are sold by sample as
well as description, the implied authority
is that the goods must correspond with
both.
If not, the buyer con reject the goods.
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Condition as to quality or fitness:
General rule is that there is no impliedcondition as to quality or fitness for any
particular purpose of goods supplied. The buyer himself must ensure that the
goods suits his purpose before he buys.
If the goods are subsequently foundunsuitable for his purpose he cannotblame the seller and return them.
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Condition as to merchantable quality:
Where goods are bought by description
from the seller who deals in goods of that
description, there is an implied condition
that the goods shall be of the
merchantable quality.
Merchantable goods are also free from
latent defects.
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Condition implied by custom:
An implied condition as to quality or
fitness for a particular purpose may be
annexed by the usage of trade.
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Implied warranties
Warranty as quiet possession of goods:
In every contract of sale, unless thereare intentions to the contrary, there is an
implied warranty that the buyer shallhave and enjoy quiet possession of thegoods.
This warranty assures the buyer that noperson will interfere or disturb in his quietenjoyment and possession of the goods.
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Warranty as to freedom from charge or
encumbrance:
In a contract of sale, there is also an
implied warranty that the goods shall be
free from any charge or encumbrance in
favour of third party.
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Warranty as to quality or fitness by
usage of trade:
In every contract of sale, an implied
warranty as to quality or fitness of goods
for a particular purpose may be annexed
by the usage of trade.
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Warranty to disclose dangerous nature
of goods:
Any person who sells goods which he
knows
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Warranty to disclose dangerous nature
of goods:
Any person who sells goods which he
knows to be dangerous, he must warn
the buyer of the probable danger.
If he sells without giving fair warning to
the buyer, he is liable for the
consequences.
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DOCTRINE OF CAVEAT EMPTOR
The Latin expression caveat emptorenunciates thedoctrine of caveat emptorof English common law.
Caveat emptormeans buyer beware or buyer takecare but does not mean that the buyer must take
chance. The doctrine of caveat emptor is based on the
presumption that a buyer relies on and uses his skilland judgment while buying the goods.
If the buyer distrusts his own skill or judgment, he mayask the seller to give a guarantee or warranty.
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Exceptions
Following are the exceptions of doctrine of caveatemptor:
When purpose of buying is made known to the seller:In such a case seller is under a duty of the buyer
subject to the following three conditions:o The buyer makes known to the seller the particular
purpose for which the goods are required.
o The buyer relies on the sellers skill or judgment.
o The goods are of the description dealt in by the seller,whether he is the manufacturer or producer.
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When the goods are bought by
description i.e. merchantable goods: In
such case the seller is bound to supply
the goods