Ppt that includes precise information on Conditions, Warranties and their differences and basic meaning of Caveat Emptor

1. CONDITION'S
WARRANTIES & CAVEAT
EMPTOR
P R E S E N T E D BY :
P R AT I D H E E PA L A K J H A

2. WHAT IS BUSINESS LAW?
• Business law, also called commercial law or mercantile law, the body of
rules, whether by convention, agreement, or national or international
legislation, governing the dealings between persons in commercial matters.
• Business law is the body of law which governs business and commerce and
is often considered to be a branch of civil law and deals both with issues of
private law and public law

3. INTRODUCTION
The Sale of Goods Act is a kind of Indian Contract Act. It
came into existence on
1 July ,1930.
It is a contract whereby the seller
transfers or agrees to transfer the
property in the goods to the buyer for
price. It is applicable all over India, except
Jammu and Kashmir.
The goods are sold from owner to
buyer for a certain price and at a given
period of time.

4. CONDITION: MEANING
Its is a representation made by the seller,
which is so important that, its non-fulfilment
defeats the very purpose of the buyer.
According to Section 12(2) ‘A Condition is a stipulation essential
to the main purpose of the contract, the breach of which, gives
rise to a right to treat the contract as repudiated.’

5. EXAMPLE
Boston v. Marshall:-
Boston consulted the car dealer, and told him that he wanted to purchase a car for the
purpose of touring.
The Car dealer, Mr Marshall suggested that a Bugatti car would be fit for the purpose.
Boston bought the car as he believed the car dealer.
However, the car was found to be unsuitable for touring purposes.
The Court ruled that the suitability of the car for the purpose of touring was a
because that was the very purpose for which Boston has purchased it. Thus, Boston
could return the car to the dealer and receive the refund for the same.

6. WARRANTIES: MEANING
“Warranty” is defined as a representation made by the seller. The non-
fullfilment of a warranty does not defeat the very purpose of the buyer. In fact,
it is a stipulation, which is not essential to the main purpose of the contract of
sale.
According to Section 12(3) :- “A Warranty is a stipulation collateral to the main
purpose of the contract, the breach of which gives rise to a claim for damages
but not the right to reject the goods and to terminate the contract.”

7. EXAMPLE
• Malti goes to a cosmetic shop to buy an eyeliner.
• The shopkeeper states that the eyeliner was waterproof and would not
get washed off, unless it was removed with cotton.
• However, later on when Malti used the eyeliner she found that it was not
waterproof. Here a breach of warranty took place and Malti is entitled to
claim damages only.

8. TYPES OF CONDITIONS & WARRANTIES
 Express Conditions and Warranties: These are always clearly stated in the contract of sale.
 Implied Conditions and Warranties: Such Conditions and Warranties are implied by law in
every contract of sale of goods unless these are specifically excluded from the terms of the
contract. There are several kinds of implied Conditions and implied Warranties.
Implied Conditions: These relate to the following:
1. Title (Section 14 A),
2. Sale by Description (Section 15),
3. Sale by Sample (Section 17),
4. Sale by Sample and Description (Section 15),
5. Condition for fitness and quality [Section 16 (i)],
6. Condition as to merchantability [Section 16(2)],
7. Condition as to wholesomeness

9. IMPLIED CONDITIONS:
1. Implied Condition as to title (Section 14 A): “In the case of sale, it is implied that the
seller has the right to sell the goods as he is the rightful owner/authorized agent.
2. Implied Condition in a sale by description: Where there is a contract of sale of goods
by description, there is an implied condition that the goods shall correspond with the
description.
3. Implied Condition in sale by sample: Where a sample of the ordered product is
provided to the buyer, and the parties treat the sample as of a standard quality for the
the sale, there is a condition that the goods will conform to the sample.
4. Implied Condition in a sale by sample as well as by description: When the sale is by
sample as well as by description, it is not sufficient that the bulk of the goods
correspond with the sample only and not with the description. Thus, the bulk of goods
should correspond with both, the sample as well as the description.
5. Implied Condition as to Fitness or Quality: Usually, there is no implied condition that
the goods supplied by the seller should be fit for the particular purpose of the buyer.
The rule ‘Caveat emptor’ applies instead. This means that while purchasing the goods,
is the responsibility of the buyer to check whether the goods he is buying are fit for his
purpose.

10. CONT..
• Implied Condition as to Merchantability: Where goods are bought by description
from a seller who deals in goods of that description (he may or may not be the
manufacturer or producer), there is an implied condition that the goods shall be of
merchantable quality.
• Implied Condition as to wholesomeness: The condition of fitness of merchantability in
case of goods requires that the goods should be wholesome, i.e., fit for the purpose
consumption.

11. IMPLIED WARRANTIES
• Implied Warranties [Section 14(b), 14(c), and 16(3)]: It is a warranty which the law
implies into the contract of sale. It can be stated that it is the stipulation, which has not
been included in the contract of sale in express words.
1. Warranty as to Quiet Possession [Section 14(b)]: There is an implied warranty that
the buyer shall have and enjoy, quiet possession of the goods.
2. Warranty as to Non-Existence of Encumbrances [Section 14(c)]: There is an implied
warranty that the goods are free from any charge or encumbrance in favour of any
third person, if the buyer is not aware of such charge or encumbrance. The breach
this warranty gives the buyer a right to claim damages from the seller.
3. Warranty to Disclose Dangerous Nature of Goods: In case of goods of dangerous
nature the seller must disclose or warn the buyer of the probable danger. If the seller
fails to do so, the buyer may make him liable for breach of implied warranty.

12. CHANGE OF A CONDITION INTO WARRANTY
If there is breach of a Condition by a seller, the buyer can opt to reject and return the
goods to the seller. In the case, there is a breach of Warranty by the seller, the buyer
can claim damages.
When a breach of condition is treated as breach of warranty, then the main implication
implication is the availability of the kind remedies that the buyer can resort to.
In the following situations, breach of condition is treated as a breach of warranty:
• a) Option of the buyer: This happens when the buyer instead of putting an end to
to the contract, accepts the goods in return for damages from the seller.
• b) When the circumstances are such that the goods sold cannot be returned: This
takes please when the buyer has already accepted the goods.

13. DISTINCTION
BETWEEN CONDITIONS
AND WARRANTIES

14. DIFFERENTIATION
CONDITIONS
A requirement or event that
should be performed before
the completion of another
action, is known as Condition.
Defined in Section 12 (2) of
Indian Sale of Goods Act, 1930.
It is directly associated with the
objective of the contract
WARRANTIES
A warranty is an assurance given
by the seller to the buyer about
the state of the product, that the
prescribed facts are genuine.
Defined in Section 12 (3) of Indian
Sale of Goods Act, 1930.
It is a subsidiary provision related
to the object of the contract.

15. DIFFERENTIATION
CONDITIONS
Result of a breach would lead
to Termination of contract.
Violation of condition can be
regarded as a violation of the
warranty.
Remedy available to the
aggrieved party on breach is to
Repudiate the contract as well
as claim damages
WARRANTIES
Result of a breach would lead
to Claim damages for the
breach
Violation of warranty does not
affect the condition.
Remedy available to the
aggrieved party on breach is to
Claim damages only.

16. CAVEAT
EMPTOR

17. CAVEAT EMPTOR
The principle that the buyer alone is responsible for checking
the quality and suitability of goods before a purchase is made.
Caveat emptor is the contract law principle that controls the
sale of real property after the date of closing, but may also
apply to sales of other goods.The phrase caveat emptor and its use as a disclaimer of
warranties arise from the fact that buyers typically have less
information about the good or service they are purchasing,
while the seller has more information.The quality of this situation is known as 'information
asymmetry'. Defects in the good or service may be hidden from
the buyer, and only known to the seller.

18. CONT..
Under the principle ,the buyer could not recover damages from the seller for
defects on the property that rendered the property unfit for ordinary purposes.
The only exception was if the seller actively concealed latent defects or
otherwise made material misrepresentations amounting to fraud.
The Principle deals with the implied conditions and warranties. The term caveat
emptor refers, ‘let the buyer beware’ i.e. it is not the duty of the seller to reveal all
the defects in the goods and so he should not be held responsible for the same.

19. POINTS TO REMEMBER
A stipulation in a contract of sale of goods may be a Condition or a
Warranty.
A Condition is a stipulation, which is the essence of the main purpose of the
contract and gives the aggrieved party the right to end the contract.
Warranty is a stipulation that is collateral to the main purpose of the contract,
and the breach of warranty results in the aggrieved party having a right to claim
damages only.
In a contract of sale of goods, Conditions and Warranties expressed or implied.
Caveat Emptor means ‘Let the buyer beware’.
There are several exceptions to the Doctrine of Caveat Emptor. These are in case
of:
Misrepresentation by the Seller, Concealment of Latent Defect, Sale by
Description, Sale by Sample, Sale by Sample as well as Description, Fitness for a
Particular Purpose, Merchantable Quality.

20. THANK YOU!