The contract of sale of goods is governed by the Sale of Goods Act 1930, which was earlier part of the Indian Contract Act, 1872. Because of the wide use of this sale contract, a special enactment was necessary but it still holds its root in the Indian Contract Act, 1872. Both the laws are complementary to each other, thus basic provisions of the Indian Contract Act are applicable to the contracts of sale.While making a contract of sale of goods the buyer and seller enters into some terms and facts of the contract, which are known as stipulation.
The stipulation may be of two types:-
Stipulation in Contract of Sale under Section 12(1) with reference to goods may be a condition or a warranty.
Warranty and condition in contract law refer to specific stipulations set in a contract of sale. A contract is an agreement that takes place between two parties to complete a mutual transaction. Warranty and condition include the specific features of those terms.
What is the condition?
Section 12 (2) defines condition as – A Condition is a stipulation essential to the main purpose of the contract. The breach of which gives rise to a right to treat the contract as repudiated. It may be expressed or implied.
Essential elements of the Condition
1. Essential for the main purpose of the contract
2. Breach of the condition destroys the very purpose of the contract.
3. Breach of the condition gives the buyer the right to claim damages and right to rescind the contract.
For example – P goes to R, a horse dealer and says I want a horse which can run at a speed of 30km per hour. The horse dealer points out a particular horse and says that this will suit you. P buys the horse. Later on P finds that the horse can run only at a speed of 20km per hour. There is a breach of condition, P can repudiate the contract, return the horse to R and can get back the price.
Boston v. Marshall
Where Mr. Boston demanded a particular type of car for the purpose of touring and the seller ( Marshall) gave him a car which was not suitable for the buyer’s purpose.
The court held that the suitability of the car for the purpose of turning was a condition because that was the very main purpose for which Boston had purchased it. Thus, Boston can return the car to the seller and receive the refund for the same.
A breach of warranty can’t be termed as breach of condition.
There are two types of conditions present in a typical contract:
These are conditions that are clearly defined and agreed to. Expressed Conditions are those which are expressly expressly agreed upon by the parties.
Section 14 of the Sale of Goods Act states that, “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”. These are conditions that are not verbally discussed but are expected to be a part of the contract. Implied conditions might include the title of goods sold, the quality of the goods, condition of completeness, and a sale by description.
Remedies for breach of conditions
1. Repudiation of contract
2. Waive the condition
3. Reject the goods
4. Option to treat conditions vas warranty and claim damages
5. Compulsion to treat the condition as warranty and to claim damages
6. No remedy when the seller is excused by law.
Condition as to title section 
In every contract of sale, essential implied conditions on the part of seller is –
1. He has the title to sell the goods.
2. In case of agreement to sell, he will have the right to sell the goods at the time of performing the contract.
If the seller has no good title to sell the given goods, the buyer has the right to refuse or reject the goods and also entitled to recover the full price paid by him.
In Rowland v. Divall (1932), the buyer bought a second hand car from the seller but after six months he was deprived of it as the seller has no good title to sell the car. It was held that the aggrieved party is entitled to recover the money.
Condition as to the description
Where there is a contract of sale of goods by description, there is an implied condition that the goods shall correspond with description. The main idea is that the goods supplied must be the same as we’re described by the seller. Sale of goods by description include situations as under :-
Where the buyer has never seen the goods and buys them only on the basis of description given by the seller.
For example – X bought a reaping machine from Y who described it to be one year old and used only to cut 50-60 acres but X found that the machine was extremely old. X was entitled to reject the machine because the machine did not correspond with the description given by the seller. (Varley v. Whipp)
The buyer has seen but rely upon the statement of seller ( Nicholson and Venn v. Smith Marrit)
Sale by Sample 
A contract of sale is a contract by Sample when there is a term in the contract, express or implied, to that effect. Such sale is subject to following conditions.
– the goods must correspond with the sample quality.
– the buyer must have a reasonable opportunity of comparing the bulk with the sample.
– the goods must be free from any defect which renders then unkerchsntable and which would not be apparent on reasonable examination of the sample. Such defects are called and are discovered when the goods are put to use.
Case laws – Drummond & Sons v. Van Liven
Sale by Sample as well as by Description
If the sale is by sample as well as by description, the goods must correspond with the sample as well as the description.
For example – X bought from Y, foreign refined rapeseed oil which was warranted to be equal to sample. The oil supplied was equal to the sample. The sample actually was a mixture of rapeseed oil and hemp oil. X was entitled to reject the goods because the goods supplied did not correspond with the description. ( Nichol v. Godts)
Condition as to quality or fitness section
There is no implied condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. Which means , the buyer must satisfy himself about the quality as well as suitability of the goods. This is expressed by the maxim caveat emptor ( let the buyer beware). But if the buyer has to rely upon the statement of seller, this maxim would not apply
For example – X purchased a hot water bottle from Y, a retail chemist. X asked Y if it would stand boiling water. The chemist told him that the bottle was meant to hold hot water. The bottle burst when water was poured into it and injured his wife. The chemist is liable to refund the price and pay damages because the bottle was unfit for the purpose for which it was purchased. (Priest v. Last)
But where the buyer fails to disclose to the seller any abnormal circumstances.
For example – X bought a tweed coat and found it unfit for her abnormally sensitive skin the seller was not liable because the cloth was fit for anyone with a normal skin and she did not inform the seller about her abnormally sensitive skin. (Griffiths v. Peter Conway Ltd)
Condition as to merchantable quality section
Where the goods are bought by destination from a seller who deals in goods of that description ( whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality. The expression ‘ merchantable quality’ means that the quality and condition of the goods must be such that a man of ordinary prudence would accept them as the goods of that description. Goods must be free from any latent or hidden defects.
For example – X bought from a dealer a bottle of wine. While Opening it’s cork in the normal manner, the bottle broke off and injured X’s hand. X was entitled to claim damages because the bottle was not of merchantable quality. ( Morelli v. Fitch )
Circumstances under which Condition as to Merchantable quality not Applicable
Provision to Section 16(2) 1 :- There shall be no implied conditions as regards defects which the buyer could have discovered if the buyer has examined in the goods.
For example – X purchased glue from Y. The glue was packed in barrels and every facility was given to X for its examination but X did not examine the contents. X could not reject the goods by saying that they are not merchantable because the opportunity of examining the goods was given to X but did not examine. ( Thomett & Fobs v. Beers & Sons)
Condition as to wholesomeness
In case of eatables or provisions or food stuffs there is an implied condition as to wholesomeness. Condition as to wholesomeness means that the goods shall be fit for human consumption.
For example – X bought milk from Y’s dairy. The milk contained typhoid germs. X’s wife consumed the mill, became infected and died. Y was liable for damages because the milk was not fit for human consumption. ( Frost v Aylesbury Dairy Co. Ltd)
Condition implied by custom section
Conditions as to rot fitness for a. Particular purpose may be annexed by the usage of trade.
For example – X sold certain drugs by auction to Y. In case of sale by auction, there was a trade custom to declare any sea damages in the goods. But that goods were sold within such declaration. Such goods were found to be sea damaged. It was held that Y could reject the goods and claim the refund of the price paid because the sale without such declaration meant that the goods were free from any sea damages. ( Jones v. Bowden)
What is a warranty?
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.
Essential elements of the Warranty
1. It is secondary to the main purpose of the contract.
2. Breach of the warranty does not destroy the very purpose of the contract.
3. Breach of the warranty gives the right to only claim damages and the buyer cannot rescind the Contract.
For example – Assume that a farmer intending to plant Soya beans, approaches a seller to buy herbicide. Assume further that the buyer requests a particular herbicide mix but the seller suggests a less expensive mix. If the chemicals fail to kill the crabgrass and the farmer has a low yield of Soya beans, the farmer could sue the seller for breach of the warranty of fitness for particular purpose because the seller knew what the farmer required.
Breach of condition can be treated as a breach of warranty in the following cases :-
1. Voluntary waiver by buyer
For example – Buyer asked for first grade quality of a particular product whose market price is Rs. 652/unit, but the seller supplied 2nd grade quality whose market price is Rs. 645/unit. Here there is a breach of condition as to quality. Therefore buyer has two options available to him
- Either he can keep the goods and claim damages or
- Return the goods and repudiate the contract while claiming the damages. But here, the buyer kept the goods and claimed the damages which were Rs. 7/unit.
2. Acceptance of goods by buyer
it means that the buyer should inspect the goods before buying or accepting the goods.
For example – A buyer buys some goods without inspecting them but later on realises that the seller has breached the condition but now the buyer cannot repudiate the contract, therefore the contract now has become a breach of warranty.
When the buyer treats the Condition as a Warranty and does not repudiate the contract on the basis of such breach; or
Where the law itself excuses the fulfilment of a Condition.
Remedies for breach of warranty
1. Claim for damages 
2. Right of diminution or extinction of price 
3. Refuse to pay price
4. Sue for excess loss 
The warranties which are generally agreed by both the parties and are inserted in the contract, it is said to be expressed warranties.
Implied warranties are those warranties which the parties assumed to have been incorporated in the contract of sale despite the fact that the parties have not specifically included them in the contract. Subject to the contract, the following are the implied warranties in the contract of sale:
Warranty as to undisturbed possession
Section 14(2) of the given Act provides that there is an implied warranty that the buyer shall enjoy the uninterrupted possession of goods. As a matter of fact, if the buyer having got possession of the goods, is later disturbed at any point, he can sue the seller for the breach of warranty.
For eg: ‘X’ purchased a second-hand bike from ‘Y’. Unknown to the fact that the bike was a stolen one, he used the bike. Later, he was compelled to return the same. X is entitled to sue Y for the breach of warranty.
Warranty as to freedom from Encumbrances
In Section 14(3) , there is an implied warranty that the goods shall be free from any charge or encumbrances that are in favour of any third party not known to the buyer. But if it is proved that the buyer is known to the fact at the time of entering into the contract, he will not be entitled to any claim.
For eg: A pledges his goods with C for a loan of Rs. 20000 and promises him to give the possession. Later on, A sells those goods to B. B is entitled to claim the damages if he suffers any.
Implied warranty to disclose Dangerous nature of the goods sold
If the goods sold are inherently dangerous or likely to be dangerous and the buyer is not aware of the fact, it is the duty of the seller to warn the buyer of the probable danger. If there would be a breach of this warranty, the seller will be liable.
For eg: A purchases a horse from B if the horse is violent and then It is the duty of the seller to inform A about the probable danger. While riding the horse, A was inflicted with serious injuries. A is entitled to claim damages from B.
As regards conditions and warranties , Section 16(4) lays down that an express warranty or condition does not negate a warranty or condition implied by this Act unless inconsistent therewith. That means that when the parties expressly agree to such stipulation and the same are inconsistent with the implied conditions and warranties, the express conditions and warranties will prevail and the implied ones in Section 14 to 17 will be negative.
- Sale of Goods Act, 1930
- Indian Contract Act, 1872
 Section 14
 Section 13(1)
 Section 14(a)
 Section 15
 Section 17
 Section 15
 Section 16(1)
 Section 16 (2)
 Section 16(3)
 Section 12(3)
 Section 13
 Section 12(3) & 59(1)
 Section 59(1)
 Section 59(2)
 Section 14(2)
 Section 14(3)