What are implied conditions in every sale contract?

The Starting Point: Caveat Emptor and Its Limits

The law begins, in Section 16, with the old maxim caveat emptor — let the buyer beware — meaning that ordinarily there is no implied warranty or condition as to the quality or fitness of goods for any particular purpose, absent fraud on the part of the seller. But this general rule is more notable for its exceptions than for its own operation, because the statute promptly carves out situations where the buyer is entitled to protection even without an express promise from the seller. It is to these implied conditions that we now turn.

Implied Condition as to Title: Section 14(a)

Section 14(a) implies, in every contract of sale, a condition that the seller has a right to sell the goods — and in an agreement to sell, that he will have such a right at the time when property is to pass. This condition strikes at the very foundation of the transaction, since a sale is, after all, meant to transfer ownership, and a seller who lacks title cannot possibly confer it.

The English case of Rowland v. Divall illustrates the severity with which this condition is treated. A buyer purchased a car, used it for several months, and was then compelled to surrender it to its true owner because the seller had himself acquired no title from a thief. The court held the buyer was entitled to recover the entire price paid, notwithstanding months of use, because the seller's implied undertaking as to title had failed completely — the buyer had, in substance, received nothing he had bargained for. In a related vein, Niblett v. Confectioners' Materials Co. held that where goods sold under a particular label infringed a third party's trademark, exposing the buyer to the risk of an injunction restraining their sale, the seller was held not to possess an unfettered right to sell those goods at all — entitling the buyer to reject them and claim damages.

Implied Warranties as to Quiet Possession and Freedom from Encumbrance: Sections 14(b) and (c)

Section 14(b) implies a warranty that the buyer shall have and enjoy quiet possession of the goods, undisturbed by anyone with a superior title. Section 14(c) implies a further warranty that the goods are free from any charge or encumbrance in favour of a third party not already disclosed to the buyer before the contract is made. These provisions work together with Section 14(a) — while the condition as to title protects the buyer at the moment of sale, these companion warranties protect his continued, undisturbed enjoyment of the goods thereafter, and his freedom from unexpected claims by secured creditors of the seller.

Implied Condition as to Description: Section 15

Section 15 lays down that where goods are sold by description, there is an implied condition that the goods shall correspond with that description; and where the sale is both by description and by sample, it is not sufficient that the bulk corresponds with the sample if the goods do not also correspond with the description. This condition is enforced with notable strictness in commercial contracts.

The House of Lords decision in Arcos Ltd. v. E.A. Ronaasen & Son demonstrates this rigour vividly — timber was ordered for making cement barrel staves at a specified half-inch thickness, but the wood delivered, though commercially serviceable and even suitable for the very purpose intended, varied slightly from the stated thickness. The House of Lords held that in commercial contracts, a buyer is entitled to insist on strict, not merely substantial, compliance with the contractual description, and the buyer was accordingly permitted to reject the entire consignment despite the commercial triviality of the deviation. Similarly, in Wallis v. Pratt, a seller contracted to supply "common English Sainfoin seed" but instead delivered "giant sainfoin," an inferior variety indistinguishable to the eye until the crop grew. The House of Lords held this was a breach of the condition as to description, and — crucially — that an exemption clause purporting to exclude warranties could not shield the seller from liability, since what had been breached was a condition, not a mere warranty, and therefore fell entirely outside the scope of the exclusion clause.

Implied Conditions as to Quality and Fitness: Section 16

Section 16 provides the two most practically significant exceptions to caveat emptor.

• Section 16(1): where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required, so as to show that he relies on the seller's skill or judgment, and the goods are of a description which the seller ordinarily supplies in the course of his business, there is an implied condition that the goods shall be reasonably fit for that purpose.

• Section 16(2): where goods are bought by description from a seller who deals in goods of that description, whether or not he is the manufacturer, there is an implied condition that the goods shall be of merchantable quality — meaning goods that would be acceptable to a reasonable person, fully aware of their actual condition, at the price paid for them. This condition does not apply, however, where the buyer has examined the goods, as regards defects which such examination ought to have revealed.

The classic illustration for fitness of purpose is found in the older authorities: where a buyer suffering from a particular skin ailment purchases woollen underwear from a manufacturer, informing him of the intended use, and the garments cause dermatitis owing to an excess of sulphite left in them during manufacture, the seller is liable for breach of the implied condition of fitness for purpose, since the buyer had made known his purpose and relied on the seller's expertise as a manufacturer of such goods.

Implied Condition in Sale by Sample: Section 17

Section 17 governs contracts of sale by sample, implying three distinct conditions: first, that the bulk shall correspond with the sample in quality; second, that the buyer shall have a reasonable opportunity of comparing the bulk with the sample; and third, that the goods shall be free from any defect rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.

The English case of Godley v. Perry illustrates the third limb of this provision well — a shopkeeper purchased plastic catapults by sample for resale to children, the sample itself appearing sound on ordinary inspection. When one of the catapults sold to a child shattered and caused serious injury, it was held that the defect was latent and could not have been discovered by reasonable examination of the sample, and the seller was accordingly liable for breach of the implied condition under this provision, even though he could not himself have detected the flaw by any ordinary inspection.

Bringing the Framework Together

These implied conditions and warranties, taken together, form the backbone of buyer protection under the Sale of Goods Act, and it is worth remembering, finally, that Section 62 permits parties to expressly exclude or vary any of these implied terms by their contract, by the course of dealing between them, or by usage binding on both parties — subject always to any overriding protection that consumer protection legislation may separately confer upon the buyer.