Conditions and Warranties in Sale of Goods Act 1930

Condition is an important term of the contract. It goes to the very root of the agreement. If a condition is broken, the buyer has the right to treat the contract as cancelled. The buyer may return the goods, refuse further performance, and also claim damages. A condition ensures that the main purpose of the contract is fulfilled. Without it, the buyer would not have agreed to the purchase. Conditions give strong protection to the buyer because they guarantee essential quality, description, and purpose of the goods.

Kinds of Conditions:

• Condition as to Title

The seller must have the right to sell the goods. This is an implied condition. If the seller has no right or defective title, the buyer can reject the goods. The buyer must get complete ownership without disturbance. Any breach of this condition makes the contract voidable.

• Condition as to Description

When goods are sold by description, the goods must match the description fully. Even a small mismatch allows the buyer to reject the goods. The buyer depends on the seller’s description, so exact similarity is required. If the goods differ, it is a breach of condition.

• Condition as to Quality or Fitness

The seller is normally not required to guarantee quality. But an implied condition arises when the buyer tells the seller the exact purpose and relies on the seller’s knowledge. The goods must be fit for that purpose. If the goods fail in the intended use, the buyer can treat it as breach of condition.

• Condition in Sales by Sample

When goods are sold by sample, the bulk must match the sample shown. The sample becomes the standard of comparison. The buyer must also get a reasonable chance to compare bulk and sample. Any hidden defect in the goods that is not visible in the sample also leads to breach.

• Condition in Sales by Sample as well as Description

Sometimes goods are sold by both sample and description. In such cases, the goods must match both the sample and the description. If the goods match the sample but not the description, or vice versa, the buyer may reject them.

• Condition as to Merchantable Quality

Merchantable quality means the goods must be of reasonable quality, fit to be sold, and usable for the ordinary purpose. If the goods have hidden defects that make them unfit for normal use, it is a breach. This condition protects buyers who rely on sellers for safe and usable goods.

Warranties

A warranty is a less important term of the contract. It does not affect the main purpose of the agreement. If a warranty is broken, the buyer can claim damages but cannot reject the goods or cancel the contract. The contract continues even after the breach. Warranties are usually about secondary or supportive promises. They help protect the buyer but do not give the right to return the goods because the breach is not serious enough to defeat the purpose of the sale.

Kinds of Warranties:

• Warranty as to Quiet Possession

The buyer should enjoy peaceful possession of the goods without disturbance. The seller must ensure that no one will claim rights over the goods. If the buyer faces disturbances, it becomes a breach of warranty.

• Warranty as to Freedom from Encumbrance

Goods should be free from any outstanding charges, loans, or claims. If the goods are under debt or charge and the buyer is not informed, it is a breach of warranty. The buyer can claim damages.

• Warranty as to Quality or Fitness

If the buyer does not rely on the seller’s skill or does not disclose the purpose, then the assurance becomes a warranty rather than a condition. This applies when the promise made is not essential to the contract. Breach gives rise only to damages.

• Warranty Implied by Usage of Trade

Trade customs may create implied warranties. If a particular trade practice assures certain standards, the law treats it as a warranty. The buyer can claim compensation if the goods fail to meet those trade standards.

• Express Warranties

These are clearly stated by the seller at the time of the contract. They may relate to durability, quality, performance, or special features of the goods. Since they are not vital to the purpose of the contract, they are treated as warranties.

When a Condition may be Treated as a Warranty

• Voluntary decision of the buyer

A condition may be treated as a warranty when the buyer chooses not to cancel the contract even after a breach. Instead of rejecting the goods, the buyer may decide to accept them and only claim damages for the loss. This happens when the buyer feels that returning the goods is not useful or practical. The law respects the buyer’s choice. By accepting the goods, the buyer gives up the right to treat the condition as essential, and the condition automatically becomes a warranty for legal purposes.

• Acceptance of goods by the Buyer

Once the buyer has accepted the goods, they cannot later reject them even if a condition is breached. Acceptance may happen when the buyer keeps the goods for a reasonable time, uses them, or does not return them quickly. After acceptance, the buyer’s remedy is only to claim damages. The law treats the breach as a warranty because the goods are already with the buyer and cannot be restored easily. This rule ensures fairness and avoids misuse of the right to reject goods after using them.

• Contract terms or Nature of the Transaction

Sometimes the contract itself states that a particular condition will be treated only as a warranty. The intention of the parties or the nature of the transaction may convert a condition into a warranty. In such cases, even if the term is important, the buyer cannot reject the goods. The buyer can seek compensation only. This usually happens in commercial contracts where strict rejection may cause heavy loss or delay. The law allows such flexibility so that business transactions continue smoothly without unnecessary cancellation.

Key differences between Condition and Warranty