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GLUL 2023 BUSINESS LAW

EXPLAIN CONDITIONS AND WARRANTIES IN A CONTRACT OF SALE OF


GOODS.

Express Conditions & Warranties:-


Conditions and warranties are those which are included in clear words and all parties are
agreed at the time of contract.

IMPLIED CONDITIONS :-
Those conditions are not included in the contract but the law presumes their existence in the
contract are called implied conditions. Following conditions are included by law in to a
contract of sale of goods.

1. Right To Sell :-
This right is considered as an implied conditions in every sale contract. It is presumed that
he can sell the goods and he can enter in sale agreement.

2. Sale By Description :-
In this case implied condition is that goods shall the correspond with the description. A
buyer can reject if the goods if these are not according the description.

3. Sale By Sample :-
In this case goods must be supplied according the sample agreed upon condition.
i. The buyer may be able to compare the sample with the bulk.
ii. The goods should be free from any defect.
iii. The bulk should match with the quality of the sample.

4. Sale By Sample and Description :-


In this case goods supplied must correspond with sample and description both. So there is
implied condition in it that if bulk does not match with one even then buyer may reject the
goods.

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5. Condition of Merchantable Quality :-


Merchantable quality means that the goods must be sale able in the market as goods of that
description are sold. In case of any defect a seller must inform the buyer. It is implied
condition.

6. Conditions As Quality To Fitness :-


Sometimes buyer informs the seller that he wants to purchase the goods for particular
purpose. It is implied condition that goods shall serve the purpose of buyer. As the buyer
relays on the sellers skill then seller should provide the goods according the description.

7. Wholesomeness Condition :-
It means conductive to health. When someone makes a sale of contract about the eatable
goods this condition is applied. If someone supply the goods and it damages to health then
supplier will be liable for damages.
Example :- Sams Food Company supplied food on the marriage party of Mr. Vicky.
After eating the food people were infected and died. The company was held liable in
damages.

IMPLIED WARRANTIES

1. Possession Of Goods :-
It is an implied warranty on the part of the seller that buyer shall enjoy the quiet
possession of goods sold to him without any disturbance. In case of any disturbance a
buyer can claim the damages from the seller.

2. Dangerous Nature Must Be Disclosed :-


It is necessary that seller should disclose the dangerous nature of the good sold to the
buyer. If he does not disclose then any type of loss suffered by the buyer will be
compensated by the seller.
Example :- Mr. Noor sold the camel to Mr. Naveed which is very dangerous. But he did
not told about the nature of the camel. The camel killed to Mr. Baqir son of Mr. Naveed
due to the ignorance of the nature of camel Mr. Noor will be liable to compensate Mr.
Naveed.

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3. Burden on Property :-
Before selling the goods, it is necessary that these should be free from any charge or
encumbrance from any third party. If a sellers does not tell about such burden on the goods
to the buyer and later on the buyer suffers a loss. The buyer can claim such damages from
seller.
Example :- Mr. Khaliq the owner of a horse, pledges it with Mr. Karim. After a month,
Mr. Khaliq obtains possession of the horse from Mr. Karim for some purpose and sells it
to the Mr. Jawad. Mr. Karim goes to Jwad and tells him the pledge story. Mr. Jawad has to
make the payment of pledged amount to Mr. Karim. In this case of breach of warranty and
Mr. Jawad is entitled to claim compensation from Mr. Khaliq.

GOODS
It is defined in the following words, "Goods mean every kind of moveable property other
then actionable claims on money and includes stocks, shares, growing crops."

KINDS OF GOODS :-
Following are the important kinds of goods :

1. Existing Goods :-
The seller possessing the goods at the time of entering into contract are called existing
goods. The goods must be in actual existence. It has two kinds :

i. Specific Goods :-
When goods are identified and agreed upon at the time of contract of sale are called
specific goods. In this case contract completes by delivering two goods agreed upon.
Example :- "X" agrees to sell "Y" a Honda motor cycle which bears number, it is a
contract so specified goods.

ii. Unascertained Goods :-


If the goods cannot be identified separately at the time of contract, it is called
unascertained good. Such type of goods are described by sample or description. In this
case seller is not bound to supply any particular good.
Example :- If "A" agrees to sell "B" one hen out of 100 living in shed. It is a contract of
unascertained goods.

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2. Future Goods :-
Such type of goods are not in the possession of the seller and not available at the time of
contract. Future goods are produced or acquired by the seller after making the contract. So
there may be agreement to sell for future goods.
Example :- Mr. Zain agrees to sell Mr. Jack a computer which he will import after a
month. It is contract of sale.

3. Contingent Goods :-
Such goods are not available at the time of contract like future goods. The acquisition of
the such goods by the seller depends upon contingency which may happen or not.
Example :- Mr. Dane agrees to sell Mr. George the diamond provided he is able to import.
It is a contract for the sale of contingent goods.

Define and distinguish or Difference between warranty and conditions with reference to
the contract of the sale of the goods act.

CONDITION
It is defined in the following words, "A condition is stipulation essential breach to the main
purpose of the contract, the breach of which give rise to a right to treat the contract as
repudiated."

So according the above definition it is clear that condition is very essential for the
performance of a contract. The breach of condition will be regarded as the breach of the
whole contract.

WARRANTY
Sales act defines the warranty in the following words, "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."

The above definition shows that for the implementation of a contract warranty is not
essential. For the breach of warranty only damages can be claimed.

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Difference or Distinction Between Condition and Warranty

1. Difference In Importance :-
Condition :A condition is essential to the main purpose of a contract.
Warranty : Breach of warranty gives right to the party to claim the damage only.

2. Difference In Rights :-
Condition : Breach of condition gives right to the party to reject the contract.
Warranty : Breach of warranty gives right to the party to claim the damages only.

3. Superiority of Condition :-
Condition : A breach of condition may be treated as a breach of warranty.
Warranty : A breach of warranty may not be treated as a breach of condition.

4. Link With Contract :-


Condition : A condition has a direct link with the essential part of the contract.
Warranty : A warranty has no direct link with the essential part of the contract.
Define the sales of goods act and discuss the essential characteristics of a contract of sales of
goods.

Sales of Goods Act :-


It is defined in these words, "A contract where by the seller transfers or agrees to transfer the
property or the goods to the buyer for price."

A contract to transfer the ownership of goods from seller to the buyer is known as contract of
sale.

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Main Features or Essentials


1. Buyer and Seller :-
One person cannot become buyer and also the seller, there are always two parties to a
contract of sale, buyer and seller.
Example :- Mr. Kashif sells the shop to Mr. Zahir. Mr. Kashif is a seller and Mr. Zahir is a
buyer in this case.

2. Goods ;-
Every kind of movable property except actionable claims (which can be enforced by legal
action) and money is regarded as goods.
Example :- Mr. Yuva sells his car to Mr. Larson for RM 7 millions. In this case car is a
moveable property, so it is a contract of sale.

3. Price :-
Price must be the consideration in the contract of sale. If goods are exchanged with goods it is
barter and not a contract of sale.
Example :- "X" sells a book to "Y" for RM 300. It is a contract of sale.

4. Transfer of Ownership :-
To constitute the sale contract the seller must transfer or agree to transfer the property
ownership to the buyers. So possession and ownership both will be transferred to buyer.
Example :- "X" sells the car to "Y" for 6 millions. The possession and ownership both will
transfer to "Y".

5. Sale :-
When ownership and possession of the good is immediately transferred from seller to buyer it
is called contract of sale.
Example :- "X" buys a pen from the "Y" and pays the whole price on his hand. It is a sale.

6. Agreement to Sell :-
When the transfer of ownership in the goods is to take place at a future date the contract is
called agreement to sell.
Example :- Mr. Bazooka agrees to purchase Mr. Tito bus for RM 25 millions. But the
transfer of bus will take place after one year. It is agreement to sell.

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CONTRACT OF SALE :-

It is defined in the following words, "A contract whereby the seller transfers or agrees to
transfer the property or the goods to the buyer for a price."

There are two parts of this definition:

1. An actual Sale :-
An actual sale property in goods transfers from sellers to buyers under the contract of sale.
Example :- Suppose Miss. Rina enters into contract of sale of horse in the hand of Mr. Guru
against RM 30,000. Mr. Guru pays RM 30,000 to Miss. Rina and she delivers her horse to
Mr. Guru. It is a sale.

2. An Agreement to Sell :-
The contract is called agreement to sell when transfer of property takes place at a future time
subject to some condition to be fulfilled.
Example :- Suppose Miss. Poonam agrees with Mr. Mirza to sell him her house against
RM30 millions after the construction next year.

DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL :-

We can analyses the difference by the following facts :

1. Transfer of Goods :-
Sale : In case of sale property is transfers from seller to buyer.
Agreement to sell : In case of agreement only promise is made to transfer the goods.

2. Nature of Performance :-
Sale : A sale is a contract which is being performed.
Agreement to sell : An agreement to sell is a contract which is to be performed.

3. Rights of Buyer and Seller :-


Sale : Goods become the property of the buyer in case of sale.
Agreement to sell : Goods remain the property of the seller in case of agreement.

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4. Insolvency of Buyer :-
Sale : In a sale case seller can use his right of lien or stoppage.
Agreement to sell : In case of agreement seller can refuse to deliver the goods if price is
not paid.

5. Buyer's Default :-
Sale : In case of sale, a seller can claim for the price of goods.
Agreement to sell : In case an agreement the seller can claim only for damages.

6. Seller's Insolvency :-
Sale : In case of sale a buyer has no risk.
Agreement to sell : In case of agreement a buyer can claim only dividend.

7. Seller's Default :-
Sale : In case of sale the buyer has a personal remedy.
Agreement to sell : In case of agreement the buyer can claim only for damages.

8. Responsibility of Loss :-
Sale : In case of sale the responsibility of loss by accident falls on the
buyers.
Agreement to sell : In case an agreement to sell responsibility of loss falls on the sellers.

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CONCLUSION

Overall, now we know that the sales of goods contract, the implied term is important
because these terms will exist in every contract of sale as provided
Sale of Goods Act 1957, unless there is agreement or a clear provision to the contrary is
made. The purpose of these terms actually not to give the burden to the seller, but more to
provide protection to the purchaser or in particular the user. When a buyer buys an
item, although not aware of his rights, indirect provisions will provide a form of protection to
him, as long as certain conditions are met first.

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BIBLIOGRAPHY
Articles
1) Paul J Omar, Contracts for the Sale of Goods French and British
Approaches, International Company and Commercial Law Review, 1998.

Books
1) A. Baviera, Sales, (UP Law Centre, Phillipines, 1981).
2) P.S Atiyah, Sale of Goods, (8th Edition, Pitman Publishers, New Delhi, 1995).
3) Avtar Singh, Principles of the Law of Sale of Goods & Hire Purchase, (3rd Edition,
Eastern Book Company, Lucknow, 1985).

Websites
1) Kevins English Law Glossary, <www.kevinboone.com/lawglos_title.html>,
(1/04/2003).
2) Manupatra, <www.manupatra.com>.
3) Westlaw, <www.westlawinternational.com>.

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