1. Condition is a term which is essential to the main purpose of the contract. Warranty is only a collateral term. It is subsidiary to the main purpose of the contract.
2. Breach of a condition gives the aggrieved party a right to repudiate the contract. It also creates a right to get damages. Breach of warranty entitles the aggrieved party to claim damages only.
3. A breach of condition may under certain circumstances, be treated as a warranty. But a warranty cannot become a condition.
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Implied Condition and Warranties:
A stipulation (or term) in a contract of sale of goods may be express or implied. Express terms are those which have been expressly agreed upon by the parties. Implied terms are those which have been enacted in the Sale of Goods Act.
Sections 14 to 17 of the Act contain a list of conditions and warranties which are implied in a contract for the sale of goods, unless the circumstances of the contract are such as to who a different intention. The implied conditions and warrants are stated below.
Condition as to title:
There is an implied condition on the part of the seller that, in the case of a sale he has the right to sell the goods, and in the case of an agreement to sell, he will have the right to sell the goods at the time when the property is to pass.—Sec. 14 (a).
(i) R bought a motor car from D and used it for four months. D had no title to the car. R was forced to return the car to the true owner. Held, there is a breach of the implied condition as to title and R is entitled to get back the purchase money paid notwithstanding the fact that he had used the car for 4 months.
(ii) If the goods delivered can be sold only by infringing a trade mark, the implied condition of title is violated and the buyer can recover damages.
(iii) In a contract for the sale of shares there is an implied condition that there is no encumbrance of charge on the shares in favour of a third party.