Business Laws: Conditions & Warranties

This set of vocabulary flashcards covers the fundamental legal concepts of conditions, warranties, and the doctrine of caveat emptor as defined in the Sale of Goods Act, 1930.

Stipulation

A representation which forms a part of the contract of sale and affects the contract, varying in significance from vital to less significant.

Condition

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.

Warranty

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.

Express Conditions and Warranties

Terms that are specifically agreed upon between the parties at the time of the contract and are expressly provided within it.

Implied Conditions and Warranties

Stipulations that are presumed by law to be present in the contract of sale, even if not explicitly stated, unless negated by express agreement.

Condition as to Title

An implied condition that the seller has the right to sell the goods in a sale, or will have the right at the time when the property is to pass in an agreement to sell.

Sale by Description

An implied condition that the goods delivered shall correspond with the description provided, such as class, kind, or specific characteristics like 'Egyptian cotton'.

Sale by Sample

A contract where implied conditions state the bulk shall correspond with the sample in quality, the buyer shall have a comparison opportunity, and goods shall be free from latent defects.

Latent Defect

A hidden defect not discoverable by an ordinary or reasonable examination of the goods.

Condition as to Merchantability

An implied condition that goods bought by description from a dealer of those goods are of such a quality that a man of ordinary prudence would accept them.

Condition as to Wholesomeness

An implied condition specifically for eatables and provisions that the goods must be fit for human consumption.

Warranty as to Undisturbed Possession

An implied warranty that the buyer shall have and enjoy quiet possession of the goods, allowing them to sue for damages if their possession is disturbed.

Warranty as to Non-existence of Encumbrances

An implied warranty that the goods are free from any charge or encumbrance in favor of any third party not declared or known to the buyer at the time of contract.

Caveat Emptor

A doctrine meaning 'let the buyer beware,' stating that the seller is not bound to disclose defects and the buyer must satisfy themselves of the goods' suitability.

Voluntary Waiver

A case where a buyer chooses to waive the performance of a condition or elects to treat a breach of condition as a breach of warranty for their own benefit.

Stipulation as to Time of Payment

Unless otherwise agreed, this is generally not deemed to be of the essence of a contract of sale under Section 11.

Stipulation as to Time of Delivery

Stipulations regarding the timing of the delivery of goods, which are usually considered the essence of the contract.