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CAIIB Paper 4 BRBL Module D Unit 8 : Conditions And Warranties (New Syllabus)
IIBF has released the New Syllabus Exam Pattern for CAIIB Exam 2023. Following the format of the current exam, CAIIB 2023 will have now four papers. The CAIIB Paper 4 (BANKING REGULATIONS AND BUSINESS LAWS) includes an important topic called “Conditions And Warranties”. Every candidate who are appearing for the CAIIB Certification Examination 2023 must understand each unit included in the syllabus.
In this article, we are going to cover all the necessary details of CAIIB Paper 4 (BRBL) Module D (COMMERCIAL & OTHER LAWS WITH REFERENCE TO BANKING OPERATIONS) Unit 8 : Conditions And Warranties, Aspirants must go through this article to better understand the topic, Conditions And Warranties and practice using our Online Mock Test Series to strengthen their knowledge of Conditions And Warranties. Unit 8 : Conditions And Warranties
Meaning Of Condition And Warranty
- Under Section 12(1) of the Sale of Goods Act, “A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty”.
- Condition: If the stipulation agreed to between the parties is essential to the main purpose of the contract and is of such a nature that if the stipulation is breached (i.e. violated/not complied) then a party to the agreement would have a right to treat the contract as repudiated (cancelled) then such a stipulation is known as a condition.
- Warranty: It is a stipulation collateral to the main purpose of the contract. The breach of such a stipulation gives rise to a claim for damages only. The parties cannot reject the goods and treat the contract as repudiated.
Implied Conditions And Warranties
Implied conditions and warranties are those, which the law intreprets to imply to every contract of sale of goods.
Title of the seller:
There is an implied condition on the part of the seller that,
- He has a right to sell the goods (in the case of a sale), or
- He will have a right to sell the goods at the time when the ownership is to pass to the buyer (in the case of an agreement to sell).
Example: A buys a second-hand car from B and pays him. Police takes away the car, as it was a stolen one. A can recover the price paid, from B, as he has violated the implied condition above.
Sale of goods by description
- In the sale of goods by description, there is an implied condition that the goods shall correspond with the description.
Example: A sells certain curtains to B by describing them to be of seventeenth century. Later on B discovers that the curtains are not of the seventeenth century. A can reject the goods and claim back the price.
Sale by sample:
In case of a sale by sample there is an implied condition that the:
- Bulk shall correspond with the sample in quality
- Buyer shall have an opportunity to compare the bulk with the sample
- Goods shall be free from any defect, rendering them un-merchantable, which would not be apparent on reasonable examination of the sample.
Sale is by sample as well as by description:
- If the sale is by sample as well as by description, the goods must correspond not only to the sample but also to the description given.
Example: A sells to B, ‘foreign rape-seed refined oil’. He even shows a sample to B. Afterwards the oil according to the sample is delivered to B. When the oil is delivered to B, he discovers that there is some ‘hemp oil’ also mixed in it. B can reject the goods because he was delivered as per the sample but the sample and oil itself were not ‘foreign rape-seed refined oil’ as described by A.
- There is an implied warranty that the buyer shall have and enjoy quiet possession of the goods.
Goods are free from any charge or encumbrance:
- There is an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made.
Quality or fitness of goods for any particular purpose:
- There is no implied warranty or condition as to the quality or fitness of goods for any particular purpose except in the following case: If the buyer discloses to the seller the purpose for which he wants the goods and he relies on the seller’s skill/judgement and if the goods are in the course of the seller’s business to supply, then in such case, there is an implied condition that the goods shall be reasonably fit for such purpose.
Example: A buys a hot water bottle from B. A asked B whether it would hold hot water. B says it is meant to hold hot water only. A’s wife is injured as the hot water bottle bursts. B was held liable for breach of implied condition as to the quality or fitness of the hot water bottle.
Caveat Emptor (Buyer beware)
- Caveat means a warning, a caution. According to the doctrine of caveat emptor, the person who buys goods must keep his eyes open, his mind active and be cautious while buying the goods. In other words, the buyer must examine the goods thoroughly
- Later on, if the goods do not serve his purpose or he depends upon his own judgement and he makes a bad choice, he cannot blame the seller for selling him such goods. The Sale of Goods Act also enshrines doctrine by stating that ‘There is no implied warranty or condition as to the quality or fitness of goods for any particular purpose’ except in specific cases.