Sales of goods act – WarrantyLegal Environment of Business

Prepared By

Manu Melwin Joy

Assistant ProfessorIlahia School of Management Studies

Kerala, India.

Phone – 9744551114Mail – manu_melwinjoy@yahoo.com

Kindly restrict the use of slides for personal purpose.Please seek permission to reproduce the same in public forms and presentations.

Definition

• A warranty is astipulation collateral tothe main purpose of thecontract, the breach ofwhich gives rise to aclaim for damages butnot to a right to rejectthe goods and treat thecontact as repudiated.

Example

• A visits a dealer to buy a car. The dealersuggests that he has a car which runs 20 km/ 1litre. A makes an agreement to buy that car.Later, on it turns out that the care run 10 km/ 1litre. It amounts to breach of warranty becausethe stipulation made by the dealer is supportiveone. Thus A can only claim for compensation,He is not entitled to avoid contract.

Essentials of a warranty

• It is collateral to the mainpurpose of the contract.

• The breach of warrantycauses damage to theaggrieved party and doesnot defeat the mainpurpose of the contract.

• The aggrieved party canonly claim the damages forthe breach of warranty butcannot repudiate thecontract.

Distinction between a condition and warranty

No Difference Condition Warranty

1 Nature It is fundamental in natureand essential for mainpurpose of contract.

It is supportive andcollateral for the contract.

2 Breach Due to breach of condition,the contract may beavoided.

It’s breach may give rise to aright to claim forcompensation.

3 Treatment Breach of condition can betreated as a breach ofwarranty.

Breach of warranty cannotbe considered as a breachof condition

Implied warranty

• Warranty for quiet

possession – The buyer has

obtained the possession of

goods and if the buyer is in

any way disturbed in the

enjoyment of goods, the

buyer has a right to sue the

seller for damages caused.

Example

• In Mason Vs Burningham, alady purchased a second handtype writer from A. She used itfor some months and alsospent some money on itsrepair. But subsequently, it wasfound that it belonged to B.Hence he was forced tosurrender it to the true ownerB. It was held that she wasentitled not only to get backthe price but also to recoverthe cost of repair from A.

Implied warranty

• Implied warranty against

encumbrance – The goods are

not subject to any charge or

encumbrance in favor of third

parties which is not disclosed

or known the buyer before or

at any time when the contract

is made.

Example

• A person had pledged hisgoods. Subsequently, hetook them from thepledge under somepretext and sells them.While the buyer is inpossession, it is disturbedthe pledges. Since thewarranty is broken, thebuyer may recoverdamages.

Implied warranty

• Implied warranty as to

usage of trade – An

implied warranty as to

quality or fitness for a

particular purpose may be

fixed by the usage of

trade.

Example

• When the goods aredangerous and the sellersis aware that the buyer isignorant of the dangerousnature of the goods, heshould warn the buyerabout the probabledanger.