. Conditions and Warranties A stipulation in a contract of sale with reference to goods may be a condition or a warranty. (i) Condition: A condition is a stipulation which is essential to the main purpose of the contract. It is core to the contract.
The non-fulfilment of the condition cancels the very contract. In other words, if a condition is broken, it leads to cancellation of contract. eg. ‘A’ intends to buy a motorbike from ‘B’.
‘A’ insists that the bike should give him a mileage of kms per litter. He prefers to have red colour bike. ‘B’, a mechanicgets a bike which gives him kms per litter. But the colour is green.
In this case, ‘A’ cannot cancel the contract. Since ‘A’ is very particular about the mileage, it is a condition to the contract. That part of contract is fulfilled by ‘B’. However, ‘A’ can ask the mechanic ‘B’ to bear the cost of repainting it with red colour.
. Where the buyer fails to return the goods (i) After the time fixed for return On the expiry of the fixed term ‘X’ delivers some goods to ‘Y’ on sale or return for days. ‘Y’ neither returns nor gives notice of rejection of goods even after the expiry of days. The goods were destroyed by fire on 8th day.
In this case, ‘Y’has to bear the loss as the ownership has passed on 8th day after the lapse of stipulated period i.e. days. (ii) Where no time has been fixed for return On the expiry of the reasonable time S Ltd. Agreed to sell a Tractor to Municipality on the condition that if the latter was not satisfied with the tractor, it could reject it.
The municipality used the tractor for a month and a half and then wanted to reject. In this case the property in the tractor is deemed to have passed to the municipality as reasonable time elapsed. (ii) Warranty: Warranty represents a stipulation which is collateral to the main purpose of the contract. It is of secondary importance to the contract.
The violation of warranty entitles the affected party to claim damages or compensation from the other party. But he cannot cancel the contract altogether. In the above example, preference of red colour represents warranty. Mechanic ‘B’ breaks the warranty in the above contract by acquiring a green colour bike.
Hence, ‘A’ is entitled merely to demand just change of colour by instructing ‘B’to repaint it with red colour and making him bear the cost of repainting. In short, the stipulation or condition is contract specific. In other words, it can be determined with reference to the terms and conditions of the contract. Let us further examine the difference between conditions and warranties: 12th Commerce Unit - - .