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Implied Conditions & Warranties: Judicial Interpretation


Authored By- Ekta Choudhary

Keywords:

Sale of goods, Implied, Conditions, Warranties, Contract, Sell, Buyers, Sellers

Abstract

The Indian Sale of Goods Act, 1930 is also known as mercantile law. It governs a multitude of economic transactions that happen within the country. A contract of sale of goods may be an agreement in which the seller transfers or agrees to transfer the property in goods to the buyer for a price. Aside from certain technicalities concerning "Sale" & "Agreement to Sell", Sale of goods may be a contract and so it must follow the Indian Contract Act 1872.

The Sale of Goods Act 1930, (hereinafter the Act), contains various provisions regarding the sale of goods. But our main concern here is with ‘Implied Conditions and Warranties’. If a stipulation forms the very basis of the contract, or, as stated in Section 12(2), is important to for the purpose of the contract, it's called a condition. On the other hand, if the stipulation isn't essential for the purpose of the contract, it's called a warranty (Section 12(3))

Introduction

In a contract, certain conditions and warranties are provided under Sections 14 to 17, are impliedly there in every contract of sale of goods. Therefore, the stipulation that is implied in a contract of sale of goods corresponding to their nature of being a condition or warranty according to the nature of the contract is called Implied Conditions and Warranties. Every contract is binding unless they are inconsistent with any express condition and warranty agreed by the parties.

Implied Conditions

All express conditions are made or not, the law presumes certain standards which are to be ensured by the seller before selling any product. There are presumptions as to nature, quality, and rightful ownership of the product are termed as implied conditions. And the implied conditions in the sale of goods are laid down in Sections 14 to 17.

There are seven implied Conditions in a contract of Sales of goods, they are:

1. Implied condition as to title:

According to Section 14, In every contract of sale, unless the circumstances are such as to show a different intention, there is an implied condition on the part of the seller, that in case of a sale, he has a right to sell, and in the case of an agreement to sell, he will have a right to sell the goods when the property is to pass.

Case Law

In Rowland v. Divall, B bought a second-hand car from S, a car dealer. After a few months, the car was taken away by the police as it was a stolen one. After that, the court observed it was a breach of condition, as the title was of S, had no right to sell the car. It was held that B could recover the full price from S.[1]

2. Implied Condition in the sale by description - According to Section. 15, when the goods are sold by description, there's an implied condition that the goods supplied shall correspond with the outline.

Case Law

In the case of Shepherd v. Kane, A ship was contracted to be sold as "copper-fastened vessel" to be taken with all faults, without any allowance for any defects whatsoever. The ship turned to be partially copper fastened. In that, the court held the buyer was entitled to reject the goods. When a descriptive word or phrase is used, associate in nursing exceedingly, during a very contract of sale to elucidate the merchandise, it creates an understood condition that the products can correspond to the outline.[2]

3. Implied condition in the sale by sample as well as description - According to Section 15, when the goods are sold by sample, also as description, it's not sufficient that the majority of goods correspond with the sample, if the goods don't correspond with the outline

Case Law

In this case, Wallis v. Pratt, the contract was for purchase of seeds noted as 'Common English Sainfoin', however, the seeds equipped to the customer were of distinct quality. The defeat conjointly existed within the sample; the discrepancy in quality was discovered solely once the seeds were planted. The customer may reclaim damages as there was a breach of condition.[3]

Before heading towards the extra tacit conditions, allow us to fathom the belief of precept meaning "Buyer Beware". This belief of precept relies on the essential principle that when a buyer is happy with the quality of the merchandise then he has no succeeding right to reject such a product.

4.Implied condition as a quality or fitness- According to Section 10(1) is an exception to caveat emptor Where the buyer expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller skill or judgment, and the goods are of the description which it is within the course of the seller's business to provide (whether he's the manufacturer or producer or not), there's an implied condition that the products shall be reasonably fit for such purpose.

Case Law

In Frost v. Aylesbury Dairy Co., the claimant bought milk from the defendant and therefore the ledger supplied to him contained statements on the precautions taken to stay the milk free from germs, The claimant's wife died of typhoid contracted from milk supplied by the defendants, it had been held that the claimant should be awarded.[4]

5. Implied condition of merchantable quality - Acc. to Section 16(2) {Second exceptions to caveat emplor}, it contains another implied condition which is by way of exception to the rule of caveat emptor.

Case Law

In Shivallingappa v. Balakrishna & Son, the buyer ordered for the best quality of 'toor dal'. The dal was loaded in rain and by the time, it reached the destination, it became damaged by wetness, it had been held that since the damaged toor dal couldn't be sold as that of the highest quality because it was not of marketable quality. The customer was entitled to claim damages.[5]

6. Implied Conditions by trade usage-

According to Section 16(3), there are instances where the purpose of purchasing goods may be ascertained from the conduct of parties to the sale or from the nature of the description of the thing purchased.

Case Law

In this case, Dr.Baretto v. T.R.Pruce, A bought a set of false teeth from a dentist. The set did not fit into A’s mouth. A can reject the set as the intention for which anybody would buy it was implicitly known to the seller, which is the dentist here.[6]

7. Implied Condition in a sale by sample:

Section 17: In the case of contract of sale by sample, there is an implied condition.

1. That the majority shall correspond to the sample in quality.

2. That the customer shall have an inexpensive opportunity of comparing the majority with the sample.

3. That the goods shall be free from any deficiency. The defect should not, but, be apparent on a reasonable examination of the sample.

Case Law

In Mody v. Gregson, in a contract for the sale of brandy, sample brandy colored with a dye was supplied. The court held that the buyer wasn't bound to the contract even though the goods supplied were equal to the sample. As the defects were not evident on the reasonable examination of the sample.[7]

Implied warranties

1. Implied warranty of quiet possession

Section14 (b): In a contract of sale unless the circumstances of the case show a different intention on, there is an implied warranty that the buyer shall have and enjoy possession of goods.

2. Implied warranty against encumbrances

Section 14 (c): Here is an implied warranty that the goods sold shall be free from any charge at encumbrances in a fever of any third party. If there's a charge or encumbrance on the goods sold, the purchaser should discharge the same, he is entitled to get compensation for the same from the vendor. If the tariff or encumbrance of the goods is thought to the customer at the time of the contract of sale, he becomes bound by the same and doesn't have any right to claim compensation for discharging the same.

3. Exclusion of implied terms and conditions

Acc. to Section 62: where any right duty or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between the parties; or by usage is such as to bind both parties to the contract.

Conclusion

As regards conditions and warranties, section 16(4) lays down that an express warranty or condition doesn't negative a guaranty or condition implied by this Act, unless inconsistent therewith. That means that when the parties expressly comply with such stipulation and therefore 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.

[1] [1923] 2KB 500. [2] [1821] 5b&Ald. 240. [3] [1910] 2KB 519 [4] [1905] 1KB 608 [5] AIR 1962 Madras 426 [6] AIR 1939 Nag 19(O) [7] [1868] L.R. 4EX. 49 References-

1. https://legal-dictionary.thefreedictionary.com/implied+condition

2. http://www.legalserviceindia.com/legal/article-241-implied-conditions-and-warranties-under-the-sale-of-goods-act-1930-with-reference-to-the-rule-of-cav.html

3. https://www.google.com/amp/s/blog.ipleaders.in/implied-conditions-and-warranties-under-the-sale-of-goods-act/amp/

4. https://www.google.com/amp/s/www.lawyersclubindia.com/amp/articles/implied-conditions-in-the-sale-of-goods--379.asp

5. https://www.investopedia.com/terms/i/implied-warranty.asp#:~:text=An%20implied%20warranty%20is%20a,to%20an%20ordinary%20buyer's%20expectations.


Books

1. R.K Bangia, Contract-II (2018), Allahabad Law Agency, Faridabad.

2. Avatar Singh, Contract -II (2018).