Topic 5: IMPLIED CONDITIONS AND IMPLIED WARRANTY IN CONTRACT OF SALE

WHAT IS IMPLIED CONDITIONS AND IMPLIED WARRANTY IN CONTRACT OF SALE

These are those conditions and warranties which the law incorporates into every contract of sale. Apart from the express condition and warranties, implied conditions and warranties that have been provided under section 14 – 17 of sale of Goods Act, 1930 are binding on the parties in every contract of sale. Breach of implied conditions can repudiate the contract and breach of implied warranties can only enable the aggrieved party to claim damages.



IMPLIED CONDITIONS:
1. Condition as to Title: U/S 14(a): In a contract to sale, it is an implied condition that the seller should be the owner of the goods sold and he should be having the right to sell these goods. Where the seller was not true owner of the goods or did not have the right to sell these goods. Then the buyer has the right to reject the goods and refuse to pay for them if the buyer has already paid the price then he can it claim back.
For example: ‘R’ sold car to ‘K’. ‘K’ used it for six months it was revealed that ‘R’ was not the true owner of goods. The true owner took his car back from ‘K’. Held, ‘K’ can cancel the contract and claim price of the car.
2. Sale by description U/S15: When the good are sold by giving the description, there is an implied condition that the goods sold shall correspond the description so given. Where the good supplied by the seller are not according to the description given then the seller commits breach of condition and therefore, the buyer can reject the goods and repudiate the contract.
For example: The buyer ordered rice of Quality X. Seller gave the description and sent the goods. Rice received by buyer was of Quality Y. the buyer can cancel the contract.



3. Sale by sample and description U/S 15: Where the goods are sold by showing a sample and also by giving description, the goods must correspond both to the sample shown and the description stated, if not it shall amount to be breach of condition and the buyer can repudiate the contract.
For example: ‘N’ agreed to sell to ‘D’ oil described as pure refined oil showing sample. The goods delivered where same as the sample but contained a mixture of Vanaspati oil. Held, ‘D’ could cancel the contract.
4. Condition as to quality or fitness U/S 16 (1): It is an Implied condition that the goods sold should serve the purpose of the buyer, i.e. the goods should be fit for that purpose. And where the seller supplies goods that are not according to his stated purpose, the buyer can reject the goods and repudiate the contract for breach of condition.
For example: An order was placed for some cart horses to be used for carriage purposes. The horses supplied were race horses unfit for carriage. There is a breach of condition.



5. Condition as to Merchantability U/S 16(2): The goods should be Merchantable i.e. the goods should be fit to use or wholesome or fit for consumption purpose, goods should not be injurious when used.
For example: Sunil brought coal from a seller by description. When Sunil used this coal at home, it blasted and Sunil suffered an accident. Held, the seller was liable, and the buyer entitle to claim damages.
6. Condition implied by custom/usage of trade U/S 16 (3): An implied condition as to quality or fitness for a particular purpose may be annexed by the custom or may be implied from the usage of trade.
For example: Bottle of milk purchased by a buyer implies the purpose for which it is bought, hence the bottle must be fit for the purpose else, the seller shall be liable.



7. Sale by sample: When goods are sold by sample, there is an implied condition that the bulk shall correspond with the sample, the buyer shall have reasonable opportunity to compare bulk with sample and the goods shall be free from any defect. The seller is liable only for latent defect.
For example: A seller sold a wooden table to a buyer which was effected by termites from within. The defect could not be revealed on ordinary examination of table. Held, the seller was liable.



IMPLIED WARRANTIES
1. Warranty as quiet possession U/S 14 (b): In a contract of sale there is an implied warranty that the buyer shall enjoy quiet possession of the goods. If the buyer is disturbed as to possession of goods because of the defective title of the seller, the buyer can claim damages from the seller on account of breach of warranty.
For example: ‘P’ purchased a second hand typewriter for Rs. 200 from ‘D’. ‘P’ get it overhauled by spending Rs 100. Later ‘P’ came to know that it was a stolen one and had to return the same to its owner. Hence ‘P’ sued ‘D’. held that ‘D’ had breach of warranty. ‘P’ is entitle to receive both prices (200+100) i.e. price of typewriter and overhauled charges as well.



2. Warranty of freedom from CHARGES or ENCUMBRANCE U/S 14 (c): The goods should not be subject to any charge or a right in favour of a third party. If there is a charge or encumbrance on the goods sold and the buyer has to discharge the same, he is entitled to get compensation for the same from the seller.
For example: ‘A’ sold property to ‘B’ on which he used to pay a charge/fee to a third party. This fact was not brought to the notice of the buyer. Held, the buyer if pays charge to the third party can claim damages from the sellers.
3. Warranty as to quality or fitness by usage of trade U/S 16(4): A warranty as to fitness for a particular purpose may be annexed to a contract of sale by a custom or usage of trade.