Page 148 - DCOM103_COMMERCIAL_LAW

Unit 15: Conditions and Warranties

Notes
Example: By a charter party (a contract by which a ship is hired for the carriage of goods),
it was agreed that ship M of 420 tons “now in the port of Amsterdam” should proceed direct
to Newport to load a cargo. In fact at the time of the contract the ship was not in the port 6f
Amsterdam and when the ship reached Newport, the charterer refused to load. Held, the words
“now in the port of Amsterdam” amounted to a condition, the breach of which entitled the
charterer to repudiate the contract [Behn v. Burness, (1863) 3 B. & S. 751].
Warranty [Sec. 12(3)]. A warranty is a stipulation which is collateral to the main purpose of the
contract. It is not of such vital importance as a condition is. It is defi ned in Wallis v. Pratt as an,
“obligation which, though it must be performed, is not so vital that a failure to perform it goes
to the substance of the contract.” If there is a breach of a warranty, the aggrieved party can only
claim damages and it has no right to treat the contract as repudiated. Whether a stipulation in
a contract of sale is a condition or a warranty depends in each case on the construction of the
contract as a whole .. The Court is not to be guided by the terminology used by the parties to the
contract. A stipulation may be a condition though called a warranty in the contract [Sec. 12(4)].

Distinction between a Condition and a Warranty

1. Difference as to value. A condition is a stipulation which is essential to the main purpose
of the contract. A warranty is a stipulation which is collateral to the main purpose of the
contract.
2. Difference as to breach. If there is a breach of a condition, the aggrieved party can repudiate
the contract of sale; in case of a breach of a warranty, the aggrieved party can claim damages
only.
3. Difference as to treatment. A breach of a condition may be treated as a breach of a warranty.
This would happen where the aggrieved party is contented with damages only. A breach
of a warranty, however, cannot be treated as a breach of a condition.

When condition to be treated as warranty (Sec. 13)

1. Voluntary waiver of condition. Where a contract of sale is subject to any condition to be
fulfilled by the seller, the buyer may (a) waive the condition, or (b) elect to treat the breach

of the condition as a breach of warranty [Sec. 13(1)]. If the buyer once decides to waive the
condition, he cannot afterwards insist on its fulfi lment.
2. Acceptance of goods by buyer. Where a contract of sale 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, unless there is a term of the contract, express
or implied, to the contrary [Sec. 13(2)].
The provisions of Sec. 13 do not affect the cases where the fulfilment of any condition, or

warranty is excused by law by reason of impossibility or otherwise [Sec. 13(3)].

15.2 Express and Implied Conditions and Warranties

In a contract of sale of goods conditions and warranties may be express or implied. Express
conditions and warranties are those which are expressly provided in the contract. Implied
conditions and warranties (contained in Secs. 14 to 17) are those which the law implies into the
contract unless the parties stipulate to the contrary. Sec. 16(4) further provides that an express
warranty or condition does not negative an implied warranty or condition unless the express
warranty or condition is inconsistent with the implied warranty or condition.

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