Business Laws · The Sale of Goods Act, 1930

Price, Conditions and Warranties under the Sale of Goods Act, 1930

Updated 4 October 2026 · Fact-checked

A condition is a stipulation essential to the main purpose of the contract; its breach lets the buyer repudiate. A warranty is collateral; its breach gives only damages. Price may be fixed by contract, agreed manner or course of dealing, else a reasonable price. Solve questions by classifying the term, then applying the remedy.

Understand Price, Conditions and Warranties

A contract of sale needs a price. Under Section 9, the price may be fixed by the contract, left to be fixed in a manner the contract agrees, or be determined by the course of dealing. If none of these applies, the buyer pays a reasonable price. What is reasonable is a question of fact, decided on the circumstances of each case.

A contract has many stipulations (terms about the goods). Section 12 splits them in two. A condition is essential to the main purpose of the contract. Its breach gives the buyer a right to treat the contract as repudiated. A warranty is collateral to the main purpose. Its breach gives a claim for damages only, not a right to reject the goods.

The label does not decide the matter. Under Section 12(4), whether a term is a condition or warranty depends on the construction of the contract. A stipulation may be a condition even if the contract calls it a warranty.

A condition can be reduced to a warranty. Under Section 13(1), the buyer may waive a condition, or elect to treat its breach as a breach of warranty. Under Section 13(2), if the contract is not severable and the buyer has accepted the goods or part of them, breach of a condition can only be treated as breach of warranty, unless the contract has an express or implied term to the contrary.

Some terms are not written but are implied by law. These cover title (Section 14), sale by description and fitness (Section 16), and sale by sample (Section 17). The general rule is that the buyer must beware (caveat emptor): there is no implied condition or warranty as to quality or fitness, except as the Act provides. Those exceptions are what you must learn. Section 62 allows implied terms to be negatived or varied by express agreement, course of dealing or binding usage.

Key rules to remember

Price rule (Section 9): Price = fixed by contract / agreed manner / course of dealing; otherwise a reasonable price; Reasonable price is a question of fact in each case.
Condition (Section 12(2)): Essential to main purpose → breach = right to repudiate; Buyer may reject goods and treat the contract as repudiated.
Warranty (Section 12(3)): Collateral to main purpose → breach = damages only; No right to reject the goods.
Construction test (Section 12(4)): Nature of term decided by construction, not by name; A term called a warranty may be a condition.
Condition treated as warranty (Section 13): Buyer waives / elects, or (non-severable contract + goods accepted) → warranty only; Section 13(2) applies unless the contract has an express or implied term to the contrary.
Implied terms as to title (Section 14): (a) condition: right to sell; (b) warranty: quiet possession; (c) warranty: free from undeclared encumbrance; Applies unless circumstances show a different intention.
Implied condition of fitness (Section 16(1)): Purpose made known + reliance on seller's skill/judgment + goods in seller's business → reasonably fit; No implied condition where a specified article is sold under its patent or trade name.
Implied condition of merchantable quality (Section 16(2)): Sale by description + seller deals in such goods → merchantable quality; No condition for defects an examination by the buyer ought to have revealed.
Sale by sample (Section 17(2)): Bulk matches sample; reasonable chance to compare; no hidden unmerchantable defect; All three are implied conditions.
Remedy for breach of warranty (Section 59): Reduce or extinguish price, or sue for damages; Buyer cannot reject the goods only for breach of warranty.

How to solve Price, Conditions and Warranties questions

Use this order for any problem on price, conditions and warranties. It mirrors the provision-facts-conclusion structure that earns marks in Business Laws.

1Identify what is asked: price, classification of a term, implied term, or the buyer's remedy.
2If price is the issue, check in order: fixed by contract, agreed manner, course of dealing. If none, state that a reasonable price is payable (Section 9).
3Classify the term as condition or warranty. Ask whether it goes to the root of the contract. Remember the name used does not decide it (Section 12(4)).
4If a term is not written in the contract, test the implied terms: title (Section 14), fitness and merchantable quality (Section 16), sample (Section 17).
5Check each element of the implied term against the facts, such as purpose made known, reliance, seller's business, and buyer's examination.
6Check whether a condition has become a warranty: waiver, election, or acceptance in a non-severable contract (Section 13).
7Check whether the implied term was excluded by agreement, dealing or usage (Section 62).
8Conclude with the remedy: repudiation and refund for condition breach, or price reduction or damages for warranty breach (Section 59).

Quickest way: Three-line answer frame

When to use it: Use it for short case-study questions in the 3-hour subjective paper when time is tight.

Line 1, Provision: write the rule in one sentence with the section number you are sure of.
Line 2, Facts: link two or three key facts to the rule's elements, such as purpose made known, reliance, acceptance.
Line 3, Conclusion: state the remedy clearly, either rejection or damages.
Memory aid for Section 14: right to sell (condition), quiet possession and no encumbrance (both warranties).
Memory aid for Section 16: Fitness needs purpose and reliance; Merchantable needs description and a dealer.

Common mistakes in Price, Conditions and Warranties

Deciding that a term is a warranty because the contract calls it one.
Students trust the label used in the question.
Fix: Apply Section 12(4): look at how essential the term is to the main purpose of the contract.
Saying the buyer can always reject goods for breach of condition.
Students forget Section 13.
Fix: Check for waiver, election, or acceptance in a non-severable contract. Then only damages are available, unless the contract says otherwise.
Applying the fitness condition to goods bought under a patent or trade name.
Students skip the proviso to Section 16(1).
Fix: If a specified article is bought under its patent or trade name, there is no implied condition of fitness.
Implying merchantable quality even though the buyer examined the goods.
Students remember the rule but not the proviso.
Fix: No implied condition covers defects which the examination ought to have revealed. Latent defects are still covered.
Treating all three Section 14 terms as conditions.
Students blur condition and warranty in the title rule.
Fix: Only the right to sell is a condition. Quiet possession and freedom from encumbrance are warranties.
Ignoring that implied terms can be excluded.
Students treat implied terms as fixed.
Fix: Mention Section 62: express agreement, course of dealing or binding usage can negative or vary them.

Worked examples

Example 1

Ravi tells a hardware dealer that he needs paint for the outer walls of his house in a rainy region and asks for his advice. The dealer supplies paint that peels off in the first rain. The dealer regularly sells paint. Ravi wants to reject the paint. Advise him.

Show the solution

Provision: Section 16(1) implies a condition that goods are reasonably fit for the purpose if the buyer makes the purpose known, relies on the seller's skill or judgment, and the goods are of a kind the seller deals in.
Facts: Ravi told the dealer the purpose (outer walls, rain) and asked for his advice, which shows reliance. The dealer regularly sells paint, so it is in the course of his business.
Application: the paint peeled in the first rain, so it was not reasonably fit for the purpose. The implied condition is breached.
Remedy: a condition is breached, so Ravi may treat the contract as repudiated and reject the paint, unless Section 13 applies. He has not been shown to have waived the condition, and nothing suggests the contract was non-severable with acceptance.

Answer: Ravi can reject the paint. The dealer breached the implied condition of fitness under Section 16(1), which gives Ravi the right to repudiate the contract under Section 12(2).

Example 2

A buys a machine of a specified model from B under a contract that is not severable. A accepts the machine, then finds it is a different model. The model was an essential term of the contract. A wants to return it. Advise A.

Show the solution

Provision: Section 12(2) says breach of a condition gives a right to repudiate. Section 13(2) says that where the contract is not severable and the buyer has accepted the goods or part of them, breach of a condition can only be treated as breach of warranty, unless the contract has an express or implied term to the contrary.
Facts: the model was essential to the main purpose, so it is a condition. The contract is not severable and A has accepted the machine. The facts show no term allowing rejection after acceptance.
Application: the model breach, although a breach of condition, is now treated as a breach of warranty.
Remedy under Section 59: A cannot reject the machine. A may set up the breach in diminution or extinction of the price, or sue B for damages.

Answer: A cannot return the machine. Because of Section 13(2), the breach is treated as a warranty breach, so A can claim a price reduction or damages under Section 59.

Exam tips

Write section numbers only for the provisions you are sure of, such as 9, 12, 13, 14, 16, 17, 59 and 62. A correct section number adds credibility.
In difference-style questions, give points on nature, effect of breach, remedy and example. Four crisp points usually read better than a long paragraph.
For caveat emptor questions, state the general rule first, then list the exceptions from Sections 14, 16 and 17 in order.
In case-study questions, always link facts to each element of the rule. Do not only state the conclusion.
Mention Section 62 if the facts show a clause or usage that excludes an implied term.

Practice questions from The Sale of Goods Act, 1930

Price, Conditions and Warranties: frequently asked questions

What is the difference between a condition and a warranty?

A condition is essential to the main purpose of the contract. Its breach lets the buyer repudiate the contract. A warranty is collateral, and its breach gives only a claim for damages, with no right to reject the goods (Section 12).

When is a condition treated as a warranty under Section 13?

When the buyer waives the condition or elects to treat the breach as a warranty breach. It also happens when the contract is not severable and the buyer has accepted the goods or part of them, unless the contract says otherwise.

What are the exceptions to caveat emptor?

Caveat emptor means let the buyer beware. The Act gives exceptions such as fitness for a known purpose, merchantable quality in sale by description, sale by sample, usage of trade, and the implied terms as to title. Each has its own conditions under Sections 14, 16 and 17.

What happens if the price is not fixed in the contract?

The price can be fixed in an agreed manner or by the course of dealing. If it is still undetermined, the buyer must pay a reasonable price. What is reasonable depends on the facts of each case (Section 9).