Whether a term in a contract of sale is a condition or a warranty depends on how the contract is interpreted, not on the name given to the term. Even if a term is called a warranty in the contract, it may still be treated as a condition if it is essential to the main purpose of the contract.
Under the Sale of Goods Act, 1930 in India, Section 12(4) provides the key principle for determining whether a stipulation in a contract of sale is a condition or a warranty: 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.
A condition is a very important promise. A warranty is a less important one. The court looks at the entire contract. It checks what the parties truly intended. It sees how central the promise is to the deal. The word used by the parties, like “warranty”, does not matter. If the promise goes to the root of the contract, it is treated as a condition—even if called something else.
Section 13 of the Sale of Goods Act says that sometimes a breach of a condition is treated just like a breach of a warranty.
This happens in three situations:
- The buyer gives up the condition (waives it).
- The buyer decides to treat the breach as a warranty only.
- The goods cannot be split up, and the buyer has already accepted them (or part of them)—unless the contract says something else.
In these cases, the buyer cannot cancel the contract or return the goods. They can only ask for money to cover their loss.
In the UK Sale of Goods Act 1979, similar rules appear in Section 11.
Examples of Condition
Example 1: Condition as to Description
Illustration: A buys a car from B, specifying that it must be a new 2025 model. B delivers a used car. This constitutes a breach of the implied condition as to description under Section 15. The buyer is entitled to reject the goods, repudiate the contract, and claim damages.
Case Law: Arcos Ltd v EA Ronaasen & Son [1933] AC 470
In the English case of Arcos Ltd v EA Ronaasen & Son (1933), which is often followed in Indian courts, the buyer ordered wooden staves exactly ½-inch thick to make cement barrels. The seller delivered staves that were mostly a bit thicker or thinner, even though they could still be used for the purpose. The House of Lords ruled that goods must exactly match the description—this is an implied condition (similar to Section 15 in India’s Sale of Goods Act). Even small differences allow the buyer to reject the goods and cancel the contract.
Example 2: Sale by Description
If a buyer orders “organic coffee beans” and receives non-organic beans, this breaches the implied condition under Section 15, even if the quality is comparable. Non-conformity with description entitles the buyer to reject the goods.
Case Law: Varley v Whipp [1900] 1 QB 513
In the English case of Varley v Whipp (1900), which is followed in Indian courts, a buyer agreed to purchase a second-hand reaping machine that the seller described as almost new and used only for 50-60 acres. When the machine was delivered, it was actually old and had been repaired. The court ruled that this was a sale by description (even though it was a specific machine the buyer had not seen). Not matching the description exactly was a breach of an implied condition, so the buyer had the right to reject the machine and cancel the contract.
Examples of Warranty
Example 1: Collateral Promise
A buys a laptop with the seller’s assurance of “one-year free servicing.” If the seller refuses to provide free servicing, this breaches a warranty.
The buyer cannot reject the laptop but may claim damages (e.g., servicing costs).
Example 2: Implied Warranty of Quiet Possession – Section 14(b)
If, after sale, a third party lawfully claims and seizes the goods (disturbing possession), the buyer can claim damages for breach of the implied warranty of quiet possession.
Case Law: Rowland v Divall [1923] 2 KB 500
In the case of Rowland v Divall (1923), a buyer purchased a car not knowing it was stolen. He used it for several months, but then the police seized it and returned it to the real owner. The court ruled that the seller had breached the implied condition about good title (similar to Section 14(a) in India’s Sale of Goods Act).
Since the buyer never got proper ownership, there was a total failure of consideration—he was entitled to a full refund of the price paid. This case mainly shows that title (ownership) is a condition, not just a warranty. However, if possession is disturbed after the sale due to a third-party claim, it also supports the implied warranty of quiet possession under Section 14(b), allowing the buyer to claim damages. This English case is often followed in Indian courts.
Conversion of Condition into Warranty
Case Law: Wallis, Son & Wells v. Pratt & Haynes [1911] AC 394
In a famous case (Wallis, Son & Wells v. Pratt & Haynes, 1911), the buyer ordered seeds described as “common English sainfoin,” but the seller supplied a lower-quality type called giant sainfoin. The contract had a clause that limited the seller’s responsibility to only warranty breaches. The House of Lords ruled that matching the exact description is a condition (a major term).
However, since the buyer had accepted and even resold the seeds, this turned the breach into a warranty under Section 13. As a result, the buyer could not cancel the contract or reject the goods—they could only claim money for the loss. This case clearly shows how accepting the goods takes away the right to reject them for a breach of condition.
Importance of the Distinction
This difference protects buyers when something really important goes wrong—they can cancel the contract if it’s a condition. At the same time, it stops contracts from being cancelled over small problems—warranties only give the right to claim money for the loss. The Sale of Goods Act, 1930 keeps things fair by giving buyers proper remedies while making trade stable and certain for everyone.
Conclusion
In the Sale of Goods Act, a condition is a very important promise that forms the heart of the contract—if the seller breaks it, the buyer can cancel the whole deal and also ask for money to cover any loss. A warranty is a smaller, less important promise—if it is broken, the buyer cannot cancel the contract but can only claim money for the loss caused. Courts decide whether something is a condition or warranty by looking at how important it really is in the contract, not just by the name the parties gave it. This difference protects buyers when something major goes wrong, while stopping contracts from being cancelled over tiny issues, making trade fair and stable for everyone involved.
