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CMA Foundation · Fundamentals of Business Laws and Business Communication · Sale of Goods Act, 1930

A buyer purchased a machine under a contract that was not severable and accepted the goods. The seller was later found to have breached a condition of the contract, and the contract contains no term allowing rejection after acceptance. Which statement is correct?

The breach of condition can only be treated as a breach of warranty. Because the contract is not severable and the buyer accepted the goods, he cannot reject them, but he may reduce the price or sue the seller for damages.

  1. AThe buyer may reject the goods and treat the contract as repudiated
  2. BThe breach can only be treated as a breach of warranty, so the buyer may claim diminution of price or damagesCorrect
  3. CThe buyer may claim nothing because acceptance waives all remedies
  4. DThe buyer may reject the goods only if he suffers further damage

Explanation

Under Section 13(2), where the contract is not severable and the buyer has accepted the goods or part, breach of a condition can only be treated as breach of warranty, absent a contrary term. Under Section 59, the buyer may then set up the breach against the price or sue for damages. Rejection is therefore not available, and acceptance does not wipe out the remedies.

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