Definition
A stipulation collateral to the main purpose of a contract of sale — breach of warranty gives rise only to a claim for damages, not to the right to reject goods or repudiate the contract.
A warranty under Section 12(3) of the Sale of Goods Act, 1930 is a 'collateral' term — one that is subsidiary to the main purpose of the contract. Breach of warranty gives the buyer a right to damages only; the buyer cannot reject the goods or treat the contract as void. The buyer must retain the goods and sue for compensation for the difference in value between goods as warranted and as delivered. Like conditions, warranties may be express (stated by the parties) or implied by law. The SGA implies a warranty of quiet possession (Section 14(b)) and freedom from encumbrances (Section 14(c)) in every sale.
Statutory Definition
Section 12(3), Sale of Goods Act, 1930: '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.' Section 12(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.'
Etymology & Origin
From Old French 'garantie' (guarantee, warranty) from 'garantir' (to guarantee, to secure). The term entered English commercial law as a promise by the seller that goods have specified qualities — a promise the seller stands behind (warrants).
Full Legal Analysis
Warranty: The Collateral Promise
A warranty is the lesser of the two species of contractual terms in sale of goods law (the greater being the condition). Where a condition goes to the heart of the contract, a warranty is peripheral — important, but not so important that its breach justifies walking away from the deal. Breach of warranty means the buyer got less than they bargained for — but they keep the goods and claim money damages to compensate for the shortfall.
Implied Warranties Under SGA
The SGA implies two warranties in every sale of goods: (a) Section 14(b) — Quiet possession: The buyer shall have and enjoy quiet possession of the goods — if a third party later disturbs the buyer's possession (e.g., by claiming an earlier superior title), the seller has breached the implied warranty of quiet possession and is liable for damages. (b) Section 14(c) — Freedom from encumbrances: The goods shall be free from any charge or encumbrance in favour of any third party at the time of sale — if goods are sold subject to a prior mortgage or lien the buyer didn't know about, the seller has breached this warranty.
When Condition Becomes Warranty: Section 13(2)
Section 13(2) SGA: 'Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect.' This crucial provision: once the buyer has accepted goods, a condition 'downgrade' to a warranty — they lose the right to reject and can only claim damages. Acceptance is therefore a critical act in sale of goods transactions.
“A warranty does not give the buyer the power to undo the deal — it only gives them money. They accepted goods that fell short of what was promised, and the law compensates them for that shortfall. The goods remain theirs; the loss is the seller’s responsibility.”
This Term in Indian Statutes
Sale of Goods Act, 1930, 1930
"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."
Warranty: collateral term — breach gives damages only, not right to reject goods
