INTRODUCTION

Originally, the transactions related to sale and purchase of goods was regulated by Chapter
VII (Sections 76 to 123) of Indian Contract Act, 1872 which was broadly based on English
common law. A need was felt to overhaul the law due to rapid growth of mercantile
transactions and various progressive English judgments being passed to meet the needs of the
community. Thus, the provisions of Chapter VII were repealed, suitably amended keeping in
mind the English Sales of Goods, 1893 and recent judicial decisions of the time. A separate
act, the Sale of Goods Act came into force on 1st July 1930. This Act lays down special
provisions governing the contract of sale of goods but it does not all together render the
general law of contract inapplicable. The provisions of contract act, insofar as they are
inconsistent with the express provisions of Sale of Goods Act, shall apply to all contracts for
the sale of goods, e.g., provisions related to legality of contract, capacity of the parties etc.
The Sale of Goods Act, 1930 deals with the sale but not with mortgage or pledge, which
comes within the purview of Transfer of Property Act, 1882 and the Indian Contract Act,
1872 respectively. Secondly, the Act deals with the goods but not all the movable property,
e.g., actionable claims and money. Provisions related to sale of immovable property and the
transfer of actionable claims is contained in the Transfer of Property Act, 1882.Sale of Goods
Act is one of very old mercantile law.
Earlier this was a part of Indian Contract Act, 1872 in chapter VII (sections 76 to 123). But
after the completion of its half century, the then legislature found that Sale of Goods is one
of the special types of Contract and in perspective of its huge use, a special enactment to this
effect is necessary. Thus, the abovementioned relevant sections in Contract Act were dug out,
and separate Sale of Goods Act was passed in 1930.The Sale of Goods Act is complimentary
to Contract Act. Though it is a special law but it has the root in Contract Act and so basic
provisions of Contract Act apply to contract of Sale of Goods also.1

INTRODUCTION TO CONDITION AND WARRANTY

At the time of selling of goods, a seller usually make certain statements and representations
with a view to induce the intending buyer to make the goods. Such representations aim at
providing satisfaction to the buyer. Some of these representations aim at providing
satisfaction to the buyer. Some of these representations are merely opinion which does not
form a part of sale, while some of them become a part of contract of sale.
A representation which forms the part of contract of sale and affects the contract is called a
stipulation which may be either a condition or a warranty. Though condition and warranty
1 http://www.lawteacher.net/free-law-essays/commercial-law/conditions-andwarranties-in-sale-of-goods-commercial-law-essay.php, accessed on 1 st
September, 2016 at 11:30 am

denote by the seller, the Sale of Goods Act recognizes them separately as both differ in the
nature.2
Conditions :
A condition is a major term of the contract which goes to the root of the contract. If a
condition is breached the innocent party is entitled to repudiate (end) the contract and claim
damages. In the case of Poussard v. Spiers3 In this case,Madame Poussard entered a contract
to perform as an opera singer for three months. She became ill five days before the opening
night and was not able to perform the first four nights. Spiers then replaced her with another
opera singer. It was held that Madame Poussard was in breach of condition and Spiers were
entitled to end the contract. She missed the opening night which was the most important
performance as all the critics and publicity would be based on this night.4
Warranties : Warranties are minor terms of a contract which are not central to the existence
of the contract. If a warranty is breached the innocent party may claim damages but cannot
end the contract.5 In the case of Bettini v Gye6the facts are Bettini agreed by contract to
perform as an opera singer for a three month period. He became ill and missed 6 days of
rehearsals. The employer sacked him and replaced him with another opera singer. The court
held that Bettini was in breach of warranty and therefore the employer was not entitled to end
the contract. Missing the rehearsals did not go to the root of the contract.7

TIME STIPULATION
Section 11 of Sale of Goods Acts State:2 http://gradestack.com/CA-CPT/Conditions-and-Warranties/Introduction/226894561-56069-study-wtw, accessed on 2nd September, 2016 at 12:00 am
3 (1876) 1 QBD 41
4http://www.e-lawresources.co.uk/Poussard-v-Spiers.php accessed on September 4,2016 at 12:00am
5 http://www.e-lawresources.co.uk/Conditions,-warranties-and-innominate-terms.php accessed on
September 4,2016 at 1:00am
6 1876 QBD 183
7http://www.e-lawresources.co.uk/Bettini-v-Gye.php accessed on September
2,2016 at 10:00 pm

11. Stipulations as to time.- 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. Whether any other stipulations as to time is of the essence of the contract or not
depends on the terms of the contract.8
Thus, section 11 lays down two rules regarding the importance of time in the contracts of
sale. The first rule states that:
1. Unless a different intention appears from the terms of the contract, stipulations
as to the law of payment are not deemed to be of the essence of a contract of sale.
Thus, the buyers failure to pay in time does not entitle the seller to repudiate the contract. In
the case of Martindale v. Smith9 the defendant sold the defendants some stacks of oats, then
on the defendants ground, under a written agreement by which the plantiff was to have
liberty to leave the stacks on the ground for four months and was to pay them in twelve
weeks. On the expiry of twelve months the buyer failed to pay and asked for further time
which the seller refused to grant. Later the buyer tendered the price, but the seller refused to
accept. The seller was held liable to the buyer in trover.10
The another rule states :
2. Whether the another stipulation as to time is of the essence of the contract or not
depends on the term of contract.
The section thus leaves the whole term on the contract and the interpretation that the
courts will place upon them. The principle adopted by the courts is that in ordinary
commercial contracts for the sale of goods the rule clearly is that time is prima facie
of the essence with respect to delievery.11 Accordingly, time is considered to be of the
essence in the following cases
1) Where the parties have expressly agreed to treat it as of the essence
2) Where delay operates as an injury
3) Where the nature and necessity of the contract require it to be so construed.12
In the case of Charles Richards Ltd. v. Oppenhaim13, the sellers agreed to supply the Rolls
Royce chasis to be ready at the latest by March 28, 1948. It was not ready on this day. The
8 http://comtax.up.nict.in/Miscellaneous%20Act/the-sale-of-goods-act-1930.pdf
accessed on September 3,2016 at 7:00 pm
9 (1841) 1 QB 389: 55 RR 285
10 Singh Avtar Law of Sale of Goods and Hire Purchase Sixth Edition Eastern
Book Company, Lucknow page 27
11 Hartley v. Humans(1920)3 KB 475, 484
12 Supra (3) page 28

buyer pressed by delivery even after the expiry of the time by which the time of delivery
became impliedly waived. It was on June 29 that the buyer lost his patience and prescribed
July 25 as the final date of delivery after which he would not accept. The chasis was offered
for delivery on October 18. The buyer refused to accept. The court of Appeal held that he was
entitled to reject. He was given the seller a reasonable notice prescribing new time of
delivery. Thereafter he was entitled to refuse.1415
CONDITIONS AND WARRANTIES
Section 12 defines Conditions and Warranties. It states it as:12. Condition and warranty.- (1) A stipulation in a contract of sale with reference to
goodswhich 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 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 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.16
Every contract of sale is likely to contain a number of terms and stipulations. Every contract
of sale is likely to contain a number of terms and stipulations about the nature and quality of
goods and their fitness for the buyers purpose.17 Thus, in a contract of sale of goods there
may be various terms or stipulations. If a stipulation forms the very basis of the contract, it is
called a condition. On the other hand, if the stipulation is not essential to the main purpose of

13 (1950) 1KB 616

14 In decision House of Lords in Tool Metal Mfg. Co Ltd. v. Tungste
Electric Co. Ltd.(1955) 1 WLR 761 was to effect that the party who holds out
concession is entitled to withdraw the concession by reasonable notice.
15 Atiyah P.S., Adams John N., Macqueen Hector, The Sales of Goods 10 th
Edition Pearson Education Asia Page 37
16 Supra
17 A mere statement or term may not become a term. In the case of Hopkins v.
Tanquarey, (1854) 15 CB 130

the contract but is only of secondary importance or as section 12(3) puts it, it is collateral to
the main purpose of the contract it is called warranty.18
For Example, a lady orders for a red saree, it being agreed between her and the seller that it
will be sent by a registered parcel, and that she will pay the price by 15th January, the day of
her marriage. In this illustration , the stipulations regarding the colour of the saree as well as
the date of supply are essential to the main purpose of the contract and are conditions whereas
stipulations regarding the time of payment of the price and the mode of despatch of the goods
are not essential to the main purpose of the contract but are only collateral, they are
warranties.19
An illustration of warranty is Harrison v. Knowles and Foster20 where the plaintiff bought
two small ships from the defendants that the dead weight of capacity of each ship was 460
tons. The capacity was in fact 360 tonnes and he sought to reject the ships. It was held that
the representation of the capacity was not a condition but a warranty, for which a plaintiff
could have sued in damages had liability for warranty not being excluded.21
As per Section 12(4) there is no hard and fast rule as to which stipulation is a condition and
which one is a warranty. Whether a stipulation in the contract of sale is a condition and a
warranty depends in each case on the construction of the contract.22
Consequences of the breach of the Contract and the warranty
Since a condition is a stipulation essential to the main purpose of the contract its breach
entitles the other party to contract, as repudiated. Similarly, if breach is made is made by the
buyer, the seller may treat it as a breach of contract and may not fulfil his part of the
obligation.

Difference between Condition and Warranty

18 Dr. Bangia R.K., The sale of Goods Act, Allahabad Law Agency, Faridabad
Tenth Edition 2016, Page 37
19 Supra (1) accessed on September
20 (1917)2 KB 606
21
22 Supra (18) page 37

BASIS FOR

CONDITION

COMPARISON
Meaning

Defined in

What is it?

Result of breach

WARRANTY

A requirement or event

A warranty is an assurance

that should be performed

given by the seller to the

before the completion of

buyer about the state of the

another action, is known

product, that the prescribed

as Condition.

facts are genuine.

Section 12 (2) of Indian

Section 12 (3) of Indian Sale

Sale of Goods Act, 1930.

of Goods Act, 1930.

It is directly associated

It is a subsidiary provision

with the objective of the

related to the object of the

contract.

contract.

Termination of contract.

Claim damages for the

breach.

Violation

Violation of condition can

Violation of warranty does

be regarded as a violation

not affect the condition.

of the warranty.
Remedy available to

Repudiate the contract as

the aggrieved party

well as claim damages.

Claim damages only.23

on breach

When Condition to be Treated as Warranty

It is defined in Section 13 as:13. When condition to be treated as warranty

23 http://keydifferences.com/difference-between-condition-and-warranty.html
accessed on September 4,2016 at 11:45 am

(1) 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.
(2) Where a contract of sale is not severable and the buyer has accepted the goods or part
thereof, 5[***] 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.
(3) 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
Thus, Section 13 of the Sale of Goods Act,1930 provides that breach of a condition is treated
as a breach of warranty in the following cases :
a) When the buyer waives the condition or elects to treat it as a breach of warranty and
not as a ground for treating the ground as repudiated.
b) When the contract is not severable and the buyer has accepted the goods or part
thereof.24
Thus, Section 13(1) leaves it to the volition of the buyer to treat the breach of
condition as a breach of warranty.
The Conditions are to be defined below: Waiver by Buyer
Where 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. These are for the benefit of the buyer and therefore, he
has option to waive the condition.
Acceptance of Goods by Buyer
Where the contract 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
unless there is a term to contract to that effect. Buyer can reject the goods. He
can take the worth and Acceptance is defined in Section 42.25
42. Acceptance
The buyer is deemed to have accepted the goods when he intimates to the
seller that he has accepted them, or when the goods have been delivered to
him and he does any act in relation to them which is inconsistent with the
ownership of the seller, or when, after the lapse of a reasonable time, he
retains the goods without intimating to the seller that he has rejected them26
In the case of Hardy & Co v. Hillerns and Fowler 27, Wheat sold under cif
contract arrived at a port of destination. The buyer took up the shipping
24 Kailash Sharma v. Patna Municipal Corpn., AIR 2009 Pat. 10
25

documents. On the day of reloading the wheat did not match the quality and
therefore rejected but reasonable time for the examination of goods didnot
expire. It was held that the transfer of the possession to the sub purchasers was
an act inconsistent with the ownership of the seller and therefore buyer has no
right of rejection.28
Remedy for breach of Warranty
Section 59(1) says that where there is a breach of warranty by the seller or
where the buyer elects or is compelled to treat any breach of warranty, the
buyer is not by reason only of such breach of warranty entitled to reject the
goods, but he may
Set up against the seller the breach of warranty in diminution or extinction of
the price
Sue the seller for damages for breach of warranty
In Kailash Sharma v. Patna Municipal Corpn.29 It was settled that buyer
have no right to reject or repudiate the sale transaction for the breach of
warranty.

Implied Conditions and Warranties

Parties may expressly provide any conditions or warranties in their contract.
Apart for what may be provided by the parties, certain conditions and
warranties are also implied by the parties. They are discussed below :Section 14 is defined as :14. Implied undertaking as to title, etc.
In a contract of sale, unless the circumstances of the contract are such as to
show a different intention there is(a) an implied condition on the part of the seller that, in the case of a sale, he
has a right to sell the goods and that, in the case of an agreement to sell, he
will have a right to sell the goods at the time when the property is to pass;
(b) an implied warranty that the buyer shall have and enjoy quiet possession of
the goods;

26http://www.advocatekhoj.com/library/bareacts/saleofgoods/42.php?Title=Sale
%20of%20Goods%20Act,%201930&STitle=Acceptance, accessed on 7 th
September,2016 at 10:00am
27 (1923) 2KB 490(CA.)
28 Supra (7) Page 33
29 AIR 2009 SC 1685

(c) an implied warranty that the goods shall be free from any charge or
encumbrance in favor of any third party not declared or known to the buyer before or at the
time when the contract is made30

30http://www.advocatekhoj.com/library/bareacts/saleofgoods/14.php?Title=Sale
%20of%20Goods%20Act,%201930&STitle=Implied%20undertaking%20as%20to
%20title,%20etc., accessed on September 7,2016 at 12:00 pm