Report No. 105

Chapter II

Existing Law on the Subject

2.1. The conditions and warranties governing the sale of goods are contained in sections 11 to 17 of the Sale of Goods Act, 1930. Section 11 provides that unless a different intention appears from the terms of the contract, stipulation as to time is not deemed to be the essence of a contract. Section 12 defines the terms 'condition and 'warranty'; section 13 when a condition may be treated as a warranty; section 14 of the implied condition to title, quiet possession etc.; section 15 as to sale by description; section 16 as to implied conditions as to quality of fitness and section 17 as to sale by sample.

2.2. The normal principle of law is summed up in the maxim 'caveat emptor' and is based on the presumption that the buyer is relying on his own skill and judgment when he effects a purchase. There are however, recognised exceptions to the above rule. First, "where a manufacturer or dealer contracts to supply an article which he manufactures or produces, or in what he deals, to be applied to particular purpose, so that the buyer necessarily trusts to the judgment or skill of the manufacturer or dealer there is in that case an implied term or warranty that it shall be reasonably fit for the purpose to which it is to be applied. In such a case the buyer trusts to the manufacturer or dealer, and relies upon his judgment and not upon his own".1

1. Jones v. Just, 1868 LR 3 QB 197.

2.3. The second exception is that where goods are bought by description from a seller who deals in goods of that description, there is an implied term that the goods shall be of merchantable quality. Both the common law rule as well as the exceptions are incorporated in section 16 of the Sale of Goods Act, 1930, which is based upon section 14 of the English Act.

2.4. The first exception would apply in a case where the description of the goods required is given by the buyer and they point to the fact that they are required for a particular purpose. In such a case, it would be a fair inference that the goods are being ordered for that particular purpose. It was held that where a person who had no special knowledge or skill with regard to hot-water-bottles, went to a chemist who sold such articles and asked for a 'hot-water-bottle', the court might justly infer that the goods were bought and sold for the purpose of being used as a hot-water-bottle.2 Similarly, a retail dealer in woollen goods who sells underpants must know that they are required for the particular purpose of being worn next to the skin.3

1. Preist v. Last, (1903) 2 KB 148.

2. Grant v. Australian Knitting Mills Ltd., AIR 1936 PC 34.

2.5. But the proviso to sub-section (1) of section 16 of the Act provides, inter alia, that if the contract for sale is for a specified article under its patent or other trade name, there is in that case an implied condition as to its fitness for any particular purpose. It was, however, held that although a person may order an article under a patent or trade name, yet if at the same time the buyer makes it clear to the seller that he is relying on the seller's skill and judgment to ensure that the article shall be fit for a particular purpose, the proviso has no applica tion.1

1. Baldry v. Marshal, (1925) 1 KB 260.

2.6. This leads us to the second exception to the common law rule of 'caveat emptor', namely, that the goods should be of merchantable quality where goods are bought from a seller who deals in the goods of that description, whether he is the manufacturer or producer or not. It applies specially for latent defects which could not be noticed on inspection of the goods. Where the plaintiff had his hair dyed by the defendant at his hair dressing establishment with a product recommended by the defendant as a good hair dye and he contracted dermatitis as a direct result of the use of the hair dye, the defendant was held liable in damages.1

1. Watson v. Buckley, Osborne, Garrett & Co. Ltd., (1940) 1 All ER 174.

2.7. Further, section 15 inter alia provides that there is an implied condition that the goods correspond with the description. The Indian law is largely based on the U.K. Sale of Goods Act