Implied Conditions and Warranties under Sale of Goods Act, 1930

Implied Conditions and Warranties under Sale of Goods Act, 1930

Implied Condition as to Title – Sec. 14(a)

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 the case of sale, he has a right to sell the goods and in the case of an agreement to sell, he will have a right to sell the goods at the time when the property in them is to pass.

In Venkateswar v. Rampratap, the defendant, after getting document registered in his favour, sold a stolen vehicle to the plaintiff. In the document receipt, the defendant clearly stated that the vehicle in question was his absolute property, free from all encumbrance and that taxes were paid upto date. There was nothing on record to show that the plaintiff purchaser had any doubt about title or that the plaintiff was aware that it was a stolen vehicle.

In suit for recovery of consideration amount, the plaintiff was held entitled to get back the amount of consideration from the defendant.

Implied Condition In Sale By Description – Sec. 15

When the goods are sold by description, there is an implied condition that the goods supplied shall correspond with the description.

“If you contract to sell peas, you cannot oblige a party to take beans. If the description of the article tendered is different in any respect, it is not the article bargained for, and the other party is not bound to take it”

Implied Condition In Sale By Sample As Well As Description [Sec.15]

When the goods are sold by sample as well as description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

Sometimes there may be a difference between the sample shown and the description of the goods. In such a case, the fact that the goods supplied conform to the sample but do not agree with the description entitle the buyer to reject the goods because the fundamental condition in every contract is that the goods should correspond to the description.

In Wallis v. Pratt, there was a contract of sale by sample of seed described as “English sainfoin”, but the “seller giving no warranty, express or implied, as to growth, description, or any other matters”.

The Rule Of Caveat Emptor [Sec. 16]

Sometimes the goods purchased by the buyer may not suit the particular purpose for which the buyer wants them. The question which in such a case arises is, whether the buyer can reject the goods or he is supposed to take the risk of the goods turning out not suitable for the required purpose.

It is incorporation of the rule contained in the maxim caveat emptor, which means buyer beware.

Implied Condition As To Quality Or Fitness [Being first exception to the rule of Caveat Emptor – Sec. 16(1)]

To this rule there is an exception. If the following requirements as mentioned in Sec. 16(1) are satisfied, there is considered to be an implied condition from the side of the seller that the goods supplied shall be reasonably fit for the purpose for which the buyer wants them

The buyer, while purchasing the goods, expressly or impliedly, makes known to the seller the particular purpose for which the goods are required by him, so as to show that the buyer relies on the seller’s skill or judgement

The goods supplied are of such a description which it is in the course of the seller’s business to supply.

In Priest v. Last, the plaintiff went to the defendant, a chemist, and asked for a hot-water bottle. The defendant sold him an American rubber bottle, saying that it would stand hot but not boiling water.

The plaintiff had purchased the bottle for his wife and while she was using it, it burst and injured her. Since the bottle was not fit for being used as a hot-water bottle.

The ‘particular purpose’ for which the buyer has purchase it, the defendant was held liable to pay compensation for the breach of the implied condition.

No Implied Condition When The Sale Under Patent or Trade Name – Proviso to Sec. 16(1)

When the buyer buys an article by specifying its patent or other trade name, there is no implied condition of the fitness of the goods for any particular purpose.

Since buyer defines the goods by mentioning the trade name, the seller’s only undertaking is that the goods shall be of the same trade name as demanded by the buyer.

Implied Condition Of Merchantable Quality [being second exception to the rule of Caveat Emptor – Sec. 16(2)

Sec. 16(2) contains another implied condition which is by way of exception to the rule of caveat emptor. It has been noted above in Sec. 15 that when the goods are bought by description, there is an implied condition that the goods supplied shall answer that description.

According to this sub-sec, there is a further implied condition in such a case and that is that the goods supplied shall be of merchantable quality. Where –

The goods are bought by description

Form a seller who deals in the goods of that description (whether he is the manufacturer or producer or not)

Condition Negatived When The  Goods Examined By The Buyer – Proviso to Sec. 16(2)

Sec. 41 of the Act entitles the buyers to have an opportunity to examine the goods before he can be called upon to accept them.

Such an opportunity will enable the buyer to ascertain whether the goods are in conformity with the contract.

Merely taking of the delivery of the goods by the buyer does not imply that he has accepted them.

Implied Conditions In A Sale By Sample – Sec. 17

A contract of sale is by sample when there is a term in the contract, express or implied, to that effect. The purpose of a sample is to present to the eye the real meaning and intention of the parties with regard to the subject-matter of the contract which owing to the imperfection of language, it may be difficult or impossible to express in words.

According to Sec. 17(2), there are three implied conditions in a contract of sale by sample

1) The first implied condition is that the bulk shall correspond with the sample in quality.

2) Another implied condition in a sale by sample is that the buyer shall have a reasonable opportunity of comparing the bulk with sample to satisfy himself that the goods supplied are in accordance with the sample.

3) In addition to the implied conditions discussed above, there is another implied condition in a sale by sample and that is that the goods shall be free from any defect, rendering them unmerchantable which would not be apparent on reasonable examination of the sample.

Implied Warranties

  1. Implied Warranty Of Quiet Possession – Sec. 14(b)

In a contract of sale unless the circumstances of the case show different intention, there is an implied warranty that the buyer shall have and enjoy possession of the goods. It means that the buyer’s possession of the goods will not be disturbed.

  1. Implied Warranty Against Encumbrances – Sec. 14(c)

There is implied warranty that the goods sold shall be free from any charge or encumbrance in favour of any 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.

If the charge or encumbrance of the goods is known to the buyer at the time of the contract of sale, he becomes bound by the same and does not have any right to claim compensation for discharging the same.

Exclusion of Implied Terms and Conditions

Sec. 62 of the Act provides that those rights, duties or liabilities which might arise under a contract by implication of law may be negative or varied –

By express agreement between the parties

By course of dealing between the parties

By usage, if the usage is such as to bind both the parties to the contract.

Section 55 of the sale of Goods Act, 1893 permitted exclusion of implied terms by an express agreement, course of dealing between the parties and the usage of trade. The courts in English devised the following methods to discourage the exclusion of liability by the seller –

by requiring that there should be no fundamental breach of contract, and

by “strict interpretation” of exemption clauses.

Fundamental Breach Of Contract

The courts insisted that giving effect to an exemption clause should not result in the fundamental breach of contract.      If a clause resulted in fundamental breach of contract, the same was not given effect to. This could be illustrated by referring to Karsales (Harrow) ltd. v. Wallis                                         

Author: R. Shanmuga Sundaram,
Student - Chettinad School of Law

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