Price, Conditions and Warranties
Price
Price, Conditions and Warranties: Another important aspect of a contract of sale is that the products must have a price. That is to say, the commodities must be sold for a profit. The word price, according to Section 2(10) of the Sale of Goods Act, refers to “the money payment for a sale of goods.”
As a result, the price is the compensation for the sale contract, which should be expressed in monetary terms. It is not a sale but an exchange if the ownership of the products is transferred for any reason other than money. However, some of the consideration might be paid in cash and part in products.
For example, suppose A brought 10 cows to B, each worth Rs.2,000. B supplied 20 bags of rice to A at a cost of Rs.750 each bag, and in return for the cows, B paid the remaining Rs.5,000 in cash. This is a legally binding contract.
WARRANTIES AND CONDITIONS
Price, Conditions and Warranties: The parties are free to engage into a contract on their own conditions. The common maxim in the selling of products is CAVEAT EMPTOR, which means “Let the Buyer Beware!” Caveat emptor is a legal philosophy that states that a buyer must acquire items after determining their quality and suitability.
He cannot blame the seller for attempting to collect damages from him if he makes a bid decision. It is not the seller’s responsibility to bring out flaws in the items he is selling. However, the buyer may wish to be certain of the items’ quality and suitability, and may inquire about the seller’s expertise or judgement before purchasing them based on the seller’s assertions. This kind of representation may be classified as either conditions or warranties. The caveat emptor principle will not apply in this case, and the contract will be subject to the condition or warranty.
Empty Beaker
Because a vendor never spells out the flaws of the things he sells, the customer should be informed at the time of purchase, according to the ‘Caveat Emptor’ philosophy. Normally, a buyer purchases products at his own risk, which means that if the items turn out to be faulty, of poor quality, or unfit for the intended use, the seller cannot be held liable.
If the vendor defrauds the consumer, the buyer has the right to reject the products. As a result, according to this philosophy, it is the buyer’s responsibility to inquire about the items before purchasing them to see whether they are suitable for his purposes. ‘According to this Statute and the explanation of any other act in force at the time, there is no implicit condition or guarantee about the suitability of the products for a specified purpose under a contract of sale of goods,’ says Section 16.
As a result, it is apparent that the customer must be completely satisfied. If a seller commits fraud or purposefully hides a fault in the products, or if the problem is of such a character that it cannot be identified via regular inquiry, the seller will be held liable. If this philosophy is properly followed, consumers will have challenges, since not every buyer is as astute as to inquire about the items’ quality or appropriateness.
Certain exceptions exist to safeguard such purchases.
Price, Conditions and Warranties: When a buyer expresses his or her intent to purchase products to the seller and relies on the seller’s knowledge and skill, it is assumed that the sold items will be suitable for the purpose. This theory does not apply when the customer makes the intention of acquiring the items known to the seller.
When products are sold by description, it is assumed that the commodities are merchantable and that the goods are in accordance with the description. The vendor will be accountable for latent faults if the customer has inspected the items.
There is no implicit constraint about the items’ appropriateness for a particular use when they are acquired under a trade or patent name.
This theory will not apply if the vendor offers products by deception or purposefully hides faults, or if the items have a latent defect.
A condition is a requirement that is vital to the contract’s principal purpose and constitutes the contract’s basic foundation. The contract may be treated as repudiated if it is breached. As a result, if the condition isn’t met, the buyer has the right to cancel the contract and reject the products. He may get his money back from the vendor if he has already paid the price.
A warranty is a term that is unrelated to the contract’s principal purpose, or a secondary guarantee. The offended party is not entitled to reject the contract because of its violation. He has no other recourse except to sue for damages. In the event of a seller’s breach of guarantee, the customer must accept the products and file a claim for damages. In this case, A buys 100 bags of wheat from B. Wheat that is suitable for human consumption is required.
This is a necessary condition. As a result, it is referred to as a condition. Other conditions like packaging, etc., is a small one, therefore regarded as guarantee. Conditions and warranties might be stated explicitly or implicitly. An explicit condition or guarantee is one that is expressed unequivocally in so many words as the contract’s foundation. Implied conditions or warranties are those that are imposed on the contract by law. Unless the parties agreed otherwise, the law integrated them into the contract. Timber from A was sold to B to be properly seasoned before transport.
The parties agreed that in the event of a disagreement, the buyer would accept or pay for the products against documentation rather than rejecting them. The clause about seasoning was ruled to be a guarantee rather than a condition. If the wood was not adequately seasoned, B had no choice except to accept it and sue for breach of warranty damages.
The following are the key differences between a condition and a warranty:
(1) A condition is a stipulation that is necessary to the contract’s major purpose, while a warranty is a stipulation that is incidental to the contract’s main purpose.
(2) A violation of condition entitles the party to regard the contract as repudiated, but a breach of warranty entitles the party to only seek damages. Because the violation of guarantee does not contradict the contract’s purpose, it cannot be rejected.
(3) A violation of condition may be considered as a breach of warranty, but it cannot be treated as a breach of warranty. Let’s use an example to clarify these two words. So, a guy buys a horse that is guaranteed to be quiet to ride. The horse turns out to be a ruthless beast. Unless the buyer has specifically reserved the right to return the horse, the buyer’s recourse is to sue for damages. If, instead of purchasing a certain horse, he expressly requests a quiet horse, that is a requirement. The buyer may now either return the horse or keep it and file a claim for damages. (Hymans v. Hartley)
When should a condition be considered as a warranty?
Three situations are listed in Section 13 of the Sales of Goods Act in which a condition sinks or descends below the level of a guarantee. The following situations elevate a problem to the level of a warranty:
(1) If the buyer agrees to waive the requirement;
(2) If the buyer considers a violation of condition to be a breach of warranty;
(3) If the contract is indivisible and the buyer has accepted the items in whole or in part.
In all three circumstances, a violation of condition is considered a warranty breach, and the buyer may only seek damages or compensation for the breach of condition. He can’t back out of the deal or refuse to accept the products. A condition is considered as a warranty in the first two situations, at the buyer’s discretion; but, in the third case, a violation of condition may only be viewed as a breach of warranty, since once the customer has accepted the products, he cannot reject them on any grounds. If a violation of condition is discovered during a future inspection, he may regard it as a breach of guarantee and claim for damages.
Assume A pledges to deliver 100 cotton bales to B on August 1st, 1980. On August 10th, A delivers the cotton bales. In this deal, time is the most important factor. B has the option of refusing the delivery. He may, however, forgo this privilege. By accepting the products and claiming damages instead, he might regard this violation of condition as a warranty breach.
The Seller’s Warranties
The seller’s warranties are often overlooked by buyers. No such thing as “standard warranties” exists. Warranties vary by industry and from business to firm, so read the seller’s assurances carefully. Is the merchandise being offered “as-is”? Is the seller waiving any implied guarantees of merchantability or fitness for a certain purpose? If this is the case, all verbal guarantees made by the vendor concerning the items may be nullified.