Concept of Condition and Warranty under The Sale of Goods Act

Introduction

The law of sale of goods on movable property in Bangladesh is dealt with by The Sale of Goods Act, of 1930. This Act defines goods as every kind of movable property and also suggests growing crops, grass and attach to the land which can be severed from land before sale other than actionable claim or money. Section 4 defines ‘Sale’ as where under a contract of sale the property in the goods is transferred from the seller to the buyer. It may be either a contract of sale or an agreement to sell. During the making of any contract, there are certain statements made by the parties for forming part of the contract. If the statement affects the contract or any party agrees to the contract based on such statement it will amount to stipulation. A mere statement does not affect the contract then we cannot say it as a stipulation but it can be opinion only. We can divide stipulation into two types- condition and warranty. Condition and warranty are correlated and also different from each other shall be discussed here. Section 12 discusses conditions and warranty but whether any stipulation is a condition or warranty it shall depend on the interpretation of the stipulation.

 

Condition

Section 12 of The Sale of Goods Act, 1930 defines ‘Condition’ as a stipulation and main purpose of the contract and if any party breach that stipulation then the aggrieved party has the right to repudiate the contract. So the condition is an obligation to other parties to do such. In other words, it is a duty to the seller to perform the condition if he fails it the buyer shall have the option to cancel the contract. But if the buyer already paid then the buyer has the right to claim damages. For example, ‘A' ordered the first quality bag on Daraz. But at the time of delivery, he finds that the bag is second quality. Now ‘A’ has the right to repudiate the contract as the condition is not fulfilled.

Types of Conditions:

There are 2 types of Conditions- Express Conditions and Implied Conditions.

1. Express Conditions: The condition which is agreed by both parties and written in the contract. Express Conditions is full and conclusive. For an example, if it is agreed by the parties to deliver a specific date then seller is bound to deliver on time. Otherwise buyer can terminate the contract.

2. Implied Conditions: Section 14 to 17 of The Sale of Goods Act, 1930 describe the list of the implied conditions. Most of the time parties assumed the implied conditions in contract of sale. Some implied conditions are given below:

1. Conditions As To Title: Seller must have the title of the property when he contracts to sale. At the time for agreement to sell and property is to pass, the seller must have the right to sell the goods. In case of Rownland V. DIivell, plaintiff bought a car and used it for 4 months but the seller has no right to the car. So plaintiff was bound to return the car to the real owner. But as a breach of condition, plaintiff entitled to get remedy from the seller.

2. Sale By Description: According to Section 15 of the Act of 1930, when a buyer intends to buy any goods by description that must be conformity with the description. If seller fails to give the goods as description then buyer have option to either accept or refuse the goods. Section 16 says, in sale of goods by description, there is implied condition that the goods must be of merchantable quality. That means goods are of such quality that would be accepted by a reasonable person. And it is also implied conditions by description that the goods must be wholesome, sound and reasonably fit for the purpose for which they are purchased.

3. Implied Condition Under Sale By Sample: Goods must be conformity with the sample. Here buyer has opportunity of comparing the goods with the sample. And if it is not possible to find any defect in reasonable examination then buyer will not get any remedy.

4. Implied Conditions Under Sale By Sample As Well As By Description: Referring to section 15 of Act 1930, when any sample and description is given then goods must be supplied in accordance with both sample and description. 

Consequences of Breach of Condition:

Section 12(2) of The Sale of Goods Act, 1930 says, if any party breach the condition of contract then other party has right to repudiate the contract. Section 60 of the Act 1930 also says the aggrieved party may treat the contract as rescinded and sue for remedy on treat the contract as subsisting and wait till the date of delivery but cannot sue for which excused by law by reason of impossibility.

Warranty:

According to Section 12(3), A warranty is a stipulation which is collateral to the main purpose of the contract. For breaching of such gives the aggrieved party a right to claim damages only but not a right to reject the goods and treat the contract as repudiated. If the definition is analyzed then it can be seen that the warranty is a stipulation but it is not a main stipulation. It can be said as a secondary or additional stipulation. If any party breach the warranty, then aggrieved party cannot repudiate the contract or refuse the to accept the goods. The aggrieved party can only claim damages.

For an example, Mina bought a mobile phone from a showroom and the phone is guaranteed for 2 years any defect and charge is guaranteed for 6 months. Mina found a defect on her phone now she can either replace or repaired it.

Types of Warranty:

There are two kinds of Warranty- Express warranty and Implied warranty.

1. Express Warranty: The warranties which are written in the contract and agreed by the parties. For an example, ‘A’ buy a refrigerator from Walton and get 6 month guaranteed. Which is mentioned in their contract and agreed by the parties. If any problem arise in refrigerator within 6 month then seller shall be bound to repair the refrigerator.

2. Implied Warranty: Implied warranty specifically mentioned in the contract but it is assumed by the parties. There are some implied warranties in the contract of sale:

I. Quiet Possession Of The Goods: According to section 14(b), The buyer shall have and enjoy quiet possession of the goods. So it is a right and Implied warranty to have possession after purchasing any goods. But if the buyer does not enjoy possession of the goods fully or letter get disturbed to enjoy the possession. The buyer can sur for breaching of implied warranty.

II. Freedom From Any Charge On Encumbrance: At the time of contract of sale, if there is any charge or encumbrance on the goods then the buyer shall be freedom from all the charge or encumbrance. But it must be noticed that buyer is not known the fact of the 3rd party. He must be buy goods as a bonafide purchaser. Otherwise he cannot claim the damages.

III. Disclosure Of Dangerous Nature Of Goods: If any danger can be accrued by the goods and that is unknown to the buyer then it is duty to the seller to inform the buyer about incoming danger. If seller fails to inform and buyer suffered any injury, then buyer can claim compensation.

IV. Usage Of Trade: Section 16(3) of The Sale of Goods Act, 1930 says it is a implied conditions that the goods must fit and quality for a particular purpose may be annexed the usage of trade.

Consequences Of Breach Of Warranty:

Referring section 12(3) of the given Act 1930, aggrieved party can only claim damages for breach of contract. He has no right to repudiate the contract as it is not a main stipulation of the contract. Where any warranty is breached can claim damages only. Section 59 says, if seller breach any warranty or buyer treats breach of condition as breach of warranty then buyer compel seller for extinction the price. If after the extinction of price, buyer suffered losses then buyer also has right to sue against seller for the damages.

Breach Of Condition Can Be Treated As Breach Of Warranty:

There are some certain circumstances, where the breach of condition can be treated as breach of warranty. Section 13 of the Sale of goods Act 1930 specifies when condition can be treated as Breach of warranty. Here are given below:

 I. Voluntary waiver of condition: According to Section 13 of The Sale of Goods Act, 1930, buyer can elect to treat the breach of condition as a breach of contract on his own will. Buyer can sue for damages instead of terminating the contract. As he treats as warranty so he has right to extinction of the price. If it is not preventing his loss, then he also can sue for damages.

For an example, ‘A’ ordered delivery him 100-piece t-shirt on Sunday. But seller deliver him 90-piece t-shirt. Now if buyer wishes to accept 90-piece t-shirt and waives the condition as warranty. For breach for buyer can suit for damages and also extinction the price that depends on the circumstances.

II. Compulsory waives a condition: This case is not depending on the will of the buyer. Where the contract is not severable and buyer has accepted already the whole or any part of the goods. After that if any condition is breached, then the condition shall he waived as warranty automatically. Buyer cannot terminate the contract but he can claim damages for breaching of warranty.

For an example, buyer demand to supply him 10 bags first quality of cement for construction his building. After delivery is made, 4 bags have been already used for construction. Letter buyer noticed that those 4 bags was not first quality but was a second quality of cement as buyer has already accepted those and cannot be severable. So now condition is waived a treated as warranty. And buyer cannot terminate the contract but only claim the damages.

Breach Of Warranty Cannot Be Treated As Breach Of Warranty:

There is no provision relating to the breach of condition as treated as breach of warranty The Sale of Goods Act, 1930. As warranty is a secondary stipulation and collateral to the main purpose. So a secondary purpose cannot be treated as a main purpose. But It would be valid if anyone treated main purpose as a secondary purpose. So warranty cannot be treated as a main purpose. Here is no right of buyer to repudiate the contract as it is not a main purpose. So it shall be invalid if anyone treated breach of warranty as a breach of condition.

For an example, Mina get guaranteed on her phone for 2 years against the defect. Within 2 years if she finds any defects then she can either repaired it or replace it. But as it is a warranty, so Mina can’t refuse the goods or terminate the contract.

Similarities Between Condition And Warranty:

1. Condition and warranty both are stipulation of the contract of sale under the Sale of goods Act 1930.

2. Condition and warranty both can be divided into two types- Express & Implied condition, Express & Implied warranty.

3. Condition and warranty both are depend on the interpretation of the contract.

4. In both case of breach of warranty & breach of condition, parties can sue for remedy.

5. Warranty is a collateral to the main purpose. So sometimes warranty depends on the Conditions.

 

Difference Between Condition And Warranties:

1. Conditions is a main stipulation of the contract under The Sale of Goods Act, 1930 but warranty is not a main stipulation rather it is collateral of the main stipulation.

2. The contract is made on the basis of fulfillment of condition. But contract is not made on the basis of noncompliance of warranty. So condition is more important stipulation than warranty.

3. Section 12(2) of the Sale of goods Act 1930 discuss about condition but section 12(3) discuss about warranty.

4. Condition is the main foundation of the contract. Warranties is treated as a promise to the customer to give remedy if any problem arise during or afterwards their contract.

5. Without condition no contract can be fulfilled under The Sale of Goods Act, 1930 but contract can be executed without warranty.

6. The main purpose of the contract is found in condition. But warranty is a secondary purpose.

7. In breach of condition of contract of sale, the whole contract can be terminated. But in case of warranties only damages can be claimed.

8. Breach of Condition can be treated as Breach of warranty but breach of warranty cannot be treated as breach of condition

Conclusion:

During the making of contract between the parties, there can some stipulation relating deliver on place, on time, quality, quantity or others. Whether this stipulation is condition or warranty. It differs from case to case and depends on the contract's interpretation. But at the time of purchasing any goods, it also duty to buyer to follow the principle of Caveat Emptor that buyer should be aware before buying anything. If any defects of the goods that can reasonably find out by the buyer, then buyer cannot claim to the seller for breach of any stipulation. So both party should aware at the time of executing the contract and selling or purchasing the goods. 

[This Article is written by Shoena Akter, Student of the Department of Land Management & Law Jagannath University, Dhaka]