Define and Distinguish Between ‘Condition’ and ‘Warranty’
Introduction
In business and trade, especially in the sale of goods, certain terms are agreed upon between the buyer and seller. These terms can be classified as either “conditions” or “warranties.” Understanding the difference between these two is important because they define the rights and responsibilities of both parties. These terms are explained in the Sale of Goods Act, 1930.
Meaning of Condition
A condition is a major term of the contract. It is essential to the main purpose of the agreement. If a condition is not fulfilled, the affected party has the right to cancel (rescind) the contract and claim damages.
Example: A orders a new washing machine from B, and the condition is that it must be fully automatic. If B delivers a semi-automatic machine, A can reject the product and cancel the contract.
Features of a Condition:
- Essential to the contract
- Non-performance gives right to cancel the contract
- Also eligible for claiming damages
Meaning of Warranty
A warranty is a minor term in a contract. It is not central to the purpose of the agreement. If a warranty is breached, the buyer can only claim compensation or damages but cannot cancel the contract.
Example: A buys a mobile phone with a warranty that the battery will last at least 1 year. If the battery fails after 8 months, A cannot return the phone but can ask for repair or replacement of the battery.
Features of a Warranty:
- Secondary to the main contract
- Breach leads only to claim for damages
- Contract remains in force
Key Differences Between Condition and Warranty
| Basis | Condition | Warranty |
|---|---|---|
| Importance | Main term of the contract | Secondary term |
| Effect of Breach | Buyer can reject goods and cancel contract | Buyer can only claim damages |
| Legal Right | Rescind contract + damages | Only damages |
| Example | Delivery of correct type of goods | Warranty about packaging or accessories |
| Conversion | Condition may become warranty in some cases | Warranty cannot become a condition |
When Condition is Treated as Warranty
According to Section 13 of the Sale of Goods Act, a condition may be treated as a warranty in the following situations:
- The buyer chooses to accept goods even after breach of condition.
- The contract is not severable and the buyer has accepted the goods either wholly or in part.
Conclusion
The distinction between a condition and a warranty is crucial in contracts involving the sale of goods. While a condition affects the whole purpose of the contract and allows cancellation if breached, a warranty only allows for compensation. Understanding this helps both buyers and sellers protect their rights and make informed decisions.