Sale of Goods Act Section 12 — Condition and warranty

CHAPTER II FORMATION OF THE CONTRACT — Conditions and waranties

Commercial / Corporate

Summary

Sub-section (1) states that any term or promise included in a contract for the sale of goods may be classified as either a condition or a warranty.

Sub-section (2) explains that a condition is a term that is essential to the main purpose of the contract. If this term is broken, the injured party has the right to treat the entire contract as cancelled or repudiated.

Sub-section (3) explains that a warranty is a term that is secondary or collateral to the main purpose of the contract. If this term is broken, the injured party can claim damages, but does not have the right to reject the goods or cancel the contract.

Sub-section (4) states that whether a particular term is a condition or a warranty is determined by how the contract is interpreted in each specific case. A term may be treated as a condition even if the contract itself labels it as a warranty.

Official Text

(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.

(2) A condition is 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.

(3) A warranty is 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 and treat the contract as repudiated.

(4) 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.