Legal Conditions of the Sale of Goods Act, 1893 - Essay Example

Law According to the Sale of Goods Act, 1893, every contract of sale is likely to contain number of terms and stipulations about the nature and quality of the goods and their fitness for the propose o the buyer. Every such term is not likely to be of equal importance. Some of them constitute a hard core of the contract and their non-fulfilment may seem to upset the very basis of the contract. They may be so vital to the contract that their breach may seem to be a breach of the contract as a whole. Such terms are known as the conditions of the contract and their breach entitles the innocent party to repudiate the contract. A term that is not of such vital importance is known as a warranty. Its breach does not lead to the repudiation but only to damages for breach. Moreover, whether a stipulation in a contract of sale is a condition or warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract. Thus, the court is not bound by the terminology employed by the parties. The court may assess the relative importance of the stipulation in the dispute in the light of all the circumstances including the intention of the parties. The breach of condition can also become a breach of warranty when in a contract of sale to any condition to be fulfilled by the seller, the buyer- Waives the condition, or Elects to treat the breach of the condition as the breach of warranty, and not for treating the contract as repudiated, Unless there is an express or implied contract to the contrary, the breach of any condition to be fulfilled by the seller can only be treated as breach of warranty- where the contract of sale is not severable and the buyer has accepted the goods or part thereof. Thus, the conditions and warranties are interchangeable according to the situation and according to the severity of such conditions or warranties in the performance of the contract. As in the case of Bentsen v. Taylor, Sons & Co, the distinction between a warranty and a condition can be decided on the fact as to the extent of truth, of what is promised to the buyer, will have an effect on the foundation and the substance of the adventure that the contract intends to carry out. In this case, the promise, which has been breached, to be a condition and not a warranty, should be of such a nature that the buyer would not have entered the contract of the sale unless the seller would have promised to him about the substantial or the performance of the promise in a stricter sense. Thus, the promise to do something or perform something by the seller according to the condition of the buyer is of great importance for the validity of the contract. In the case where the innocent party is assured of the literal and strict performance of the promise, and he surely would not have entered into the contract without the performance of such a promise, then he has all the right to repudiate the contract and may find himself discharged of the contract. This failure to perform any promise may be as slight as possible but if that has been promised to be performed in the strict and literal sense then, the innocent person has every right to cancel off the deal or repudiate the contract. This was what had been said in the case of Bensten v. Taylor, Sons and Co. in the year 1893. Thus it has been made very clear that the stipulation in a contract which is very essential to the main purpose of the contract is a condition and that stipulation in a contract which is collateral to the main purpose of the contract is called a warranty. A condition is a provision in a contract which is vital for the existence of the contract and which affects the whole consideration. This means that the breach of the condition gives rise to a right to treat the contract as repudiated. On the other hand, a warranty is a provision in a contract that is not vital for the existence of the contract and which affects only a part of the contract. Thus the breach of warranty gives rise to a claim of damages only and one cannot repudiate the contract on the ground of the breach of warranty. There is also an interesting aspect attached to the terms –conditions and warranty. It has been provided that, in case of the breach of condition, the buyer is entitled to treat it as a breach of warranty and thus has the option to file a suit for the damages without completely repudiating the contract. But in case of the breach of warranty, the buyer is not entitled to treat it as a breach of condition and also does not have the same option of repudiating the contract but can only claim for damages. It can be exemplified from the case of Baldry vs. Marshall (1925). In this case the plaintiff consulted the defendants, who were motor car dealers, for a car suitable for touring purposes. The defendants suggested that a ‘Bugatti’ car would be appropriate and the plaintiff accordingly bought one. It seemed that the car turned out to be totally unfit for touring purposes. It was held that the suitability of the car for the touring purposes was neither a guarantee nor a warranty but rather a condition of the contract, which needed to be fulfilled by the seller. He term was so vital that its non-fulfilment defeated the very purpose for which the car was bought by the plaintiff. He was therefore, entitled to reject the deal and get the refund of the entire amount of the car’s price paid. In a similar manner, where X sells a quantity of food stuffs to Y, it is an essential term of the contract (although it may not be expressly stated in the contract) that the food materials will be fit for human consumption. So, if they are found to contain any poisonous substance, Y will be perfectly entitled to reject the food materials and repudiate the contract. This essential term is called a condition. In this case the condition is not expressly mentioned by Y nor mentioned in the contract but still it is an implied condition that without the condition of the food materials being fit for human consumption, Y would not have agreed in the first place to go forward with the contract. While if some minor term of the contract is broken, Y may claim compensation in respect of its breach, but he cannot avoid the contract. Such a minor term is called a warranty. Thus, if in this case, the food stuff is packed in half kilo boxes instead of the one kilo boxes, which might have been specified in the contract, only a minor term of the contract, a warranty, is broken and for this, the buyer has no right to repudiate the contract on this ground only, although of course, it is open to him to claim compensation. The conditions and warranties are vital parts of a contract and without that a contract would be meaningless as there are always certain requirements that the buyer has and there are always certain things in specifications that are required by the buyer and these make up the conditions and the warranties. Thus, in the absence of such conditions and warranties, the contract would seem to be meaningless and would seem to be dull and without any life in it. In fact, what is important is the condition in the contract for which the seller takes care to provide the best that is there with him to the buyer. If there would have been no conditions provided by the buyer, then the seller would be in a position to spare off all the damaged and deteriorated products that are of no use to him and in such a case the buyer would have got no stance to sue the seller for such a conduct of his. Therefore, it is of great importance that there are certain conditions and warranties in every contract so that there lays a life in the contract. When there is a condition in a contract it is called a conditional contract and the contract is said to be performed in its full meaning only when that condition is fulfilled or when the condition is taken into consideration by the seller. The condition is always kept by the buyer in front of the seller before the sale and the performance of that particular condition or the stipulation gives rise to the performance of the contract in its real meaning. The decision whether the stipulation is a condition or a warranty in a contract is totally put in the discretion of the judges and the court, who are the best persons to decide the matter without any kind of prejudices. The seller may try to prove the fact that the condition was not very necessary and thus it was a warranty and so the contract should not be repudiated. In the similar manner, the right of the buyer gives him the high to speak for his side trying to prove that the stipulation that was mentioned was actually very much necessary for the performance of the contract and without the stipulation being fulfilled, the contract has no meaning to him or that the contract does not even exist for him. In such instances, it is the duty of the court to tackle the situation and see for the gravity of the matter and bring out the best result that can be found from the arguments of both the sides. The courts are at the best discretion to give the judgement in the case where there is a decision to be taken for the stipulation to be connoted as a condition or a warranty. When there is a breach of the warranty, there is not much difference found in the contract and the defaulter has just to pay for the damages but when there is a breach of the condition, then, the contract can be repudiated at the instance of the buyer or the innocent person. It has been specifically mentioned that when there is a dispute as to whether the stipulation is a warranty or a contract, then it is up to the discretion of the buyer or the innocent person to either waive off the repudiation of the contract by taking back the condition to be a warranty or else the contract would end there. Thus the stipulation in a contract which cannot be categorised to be a condition or a warranty in the beginning can be found to be complicated in the latter half of the performance of the contract when the question of the fulfilling of that very stipulation comes to the forefront. Thus any condition cannot be termed to be a warranty from the very beginning of the contract and thus every stipulation that has been provided either expressly or implicitly should be performed to its fullest level and thus the contract would be saved from being repudiated. The question of the stipulation or the undertakings to be a condition or a warranty will always be there as a question to be put forth in front of the court. Reference: 1. Paclii.org. 20 February, 1894. Pacific Law Materials. 27 November, 2006. Read More