Conditions & Warranty

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INTRODUCTION:
The Sales of Goods Act 1893 provides the definition of ‘condition’ and ‘warranty’. During the period between 1893 to 1962 both ‘condition’ and ‘warranty’ was generally accepted that they were the only two types of terms which assist in ‘identifying the breaches which entitled the injured party to terminate the contract. In the turning point of 1962, a new type of term-intermediate term brought about a whole new page into the Law of Contract. Hong Kong Fir Shipping Co. Ltd vs Kawasaki Kisen Kaisha Ltd is the key case which owns the credit for this discovery. In the case, the ship owner hired out the Hong Kong fir, ‘being in every way fitted for ordinary cargo service’. The ship was delivered on 13 February 1957, sailing from the United State to Osaka. Due to the age of the ship’s machinery, the engines were old inadequate. However, the numbers of staff were insufficient and the chief engineer was incompetent. Consequentially, twenty weeks out of twenty four months was the ship ‘off hire’ for repair. On the other hand, freight rates had fallen during that period. The new rate was a quarter and a third cheaper than the rate fixed originally. The charterer wished to terminate the contract for the owner’s failure to hire out a seaworthy ship which they claimed to be a ‘condition’ and that the consequences of the breach was so serious that it has frustrated their purpose in entering into the charter-party. It was held seaworthiness was not a condition in their contract and that the delay caused by the repairs was not as grievous as to frustrate the charter-party’s commercial purpose. Therefore the chartered cannot terminate the contract. In a contract of sale, usually parties makes certain statements or the stipulation about the goods under sale or purchase. These stipulations in a contract of sale made with reference to the subject matter of sale. It may be either a condition or warranty. These stipulations forms the part of the contract of sale and a breach of which may provides a remedy to the buyers against the seller. The provisions relating to conditions and warranties are covered under section 11 to 17 of the sales of Goods Act. Section 11 of the Sale of Goods Act 1930 provides, “Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale. Whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract”. In a contract of sale of goods there maybe various terms or stipulations. Though the definition of the word “stipulation” in the act is not been given, but when refer in Halsbury’s Laws of England, ‘stipulation is said to include only promises and not collateral contingencies beyond the control of either party e.g., in sales of goods “to arrive”. A bare ‘representation’ will not amount to a stipulation. Such stipulation maybe of major terms/conditions and minor terms/warranty. Condition means a stipulation or provision; a thing on whose fulfilment another thing or act is made to depend, something agreed upon as a requisite to the doing or taking effect of something else. Section 12(2) of Sales of Goods Act, 1930 defined conditions as “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”. On the other hand, “Warranty is an agreement with reference to goods which are the subject of a contract of sale, but collateral to the main purpose of such contract, the breach of which gives rise to a claim for damages but not a right to reject the goods and treat the contract repudiated. It may be, express or implied” ; According to Section 12(3) of Sales of Goods Act, 1930, “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 goods and treat the contract as repudiated.”...
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