Conditions and warrantiesCentral

Section 12 of The Sale of Goods Act, 1930

Condition and warranty.

(1)A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.
(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.
(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 to a right to reject the goods and treat the contract as repudiated.
(4)Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.

Summary

This section defines two types of rules in a contract, which are conditions and warranties.
A condition is a major rule essential to the main purpose of the contract, and breaking it allows the buyer to cancel the deal.
A warranty is a minor or secondary rule, and breaking it only allows the buyer to claim money for damages but not to return the goods.
Whether a rule is a condition or a warranty depends on what the contract actually means, regardless of the labels used.
Even if the contract calls a rule a warranty, the law might still treat it as a condition if it is vital to the deal.

Practical examples

1David buys a truck specifically to carry 10 tons of gravel. If the truck can only carry 2 tons, this is a breach of a condition because it fails the main purpose of the contract. David can return the truck.

2Sarah buys a new blue car. When it arrives, there is a small scratch on the door. This is likely a breach of a warranty because the car still works for its main purpose. Sarah can ask for money to fix the scratch but cannot return the whole car.

FAQ

1. What is the main difference between a condition and a warranty in the Sale of Goods Act?

Under Section 12 of the Sale of Goods Act, 1930, a condition is vital to the contract and its breach allows for cancellation, while a warranty is secondary and its breach only allows for money damages.

2. Can I return goods if a warranty is broken under Section 12 of the 1930 Act?

No, Section 12 of the Sale of Goods Act, 1930 explicitly states that a breach of warranty does not give you the right to reject the goods or treat the contract as repudiated, which means cancelled.

3. Does the label used in the contract matter for Section 12 of the Sale of Goods Act?

Not necessarily, as Section 12 of the Sale of Goods Act, 1930 says a rule may be a condition even if the contract calls it a warranty, depending on the contract's construction.

Test yourself

Q1.According to Section 12 of The Sale of Goods Act, 1930, what is a condition?

Q2.Under Section 12 of The Sale of Goods Act, 1930, what right does a buyer have if a warranty is broken?

Q3.If a contract calls a rule a warranty but it is actually essential to the deal, how is it treated under Section 12 of The Sale of Goods Act, 1930?

Q4.Under Section 12 of The Sale of Goods Act, 1930, what does repudiated mean?

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