Conditions and Warranties Outline

CONDITION & WARRANTIES
A. CONDITION
 When a contract contains a condition, the non-happening of which would not
constitute a breach but extinguishes the obligation
 However, if party to the sales contract has promised that the condition should
happen or be performed, the non-performance of which may be treated by parties as
breach
CONDITION WARRANTY
Purports to existence of obligation Purports to performance of obligation
Obligation must be stipulated to form part Need not be stipulated; may form part of
of the obligation obligation by provision of law
May attach itself to obligation of seller to Relates to the subject matter itself or to
deliver possession & transfer obligation of the seller as to the subject
matter of the sale
B. EXPRESS WARRANTIES ( REQUISITES )

1. it must be an affirmation of fact or any promise by seller relating to the subject
matter of sale
2. natural tendency of affirmation or promise is to induce buyer to purchase subject
matter
3. buyer purchases the subject matter relying thereon
 when breached, seller is liable for damages
C. IMPLIED WARRANTIES – deemed included in all contracts of sale whether parties are
actually aware or not aware or whether they were intended or not; by operation of
law
1. warranty that seller has a right to sell
 refers to consummation stage since in consummation stage, it is where
ownership is transferred by tradition
 not applicable to sheriff, auctioneer, mortgagee, pledgee
2. warranty against eviction
 unless contrary provision appears in contract
 when ownership is transferred, buyer shall enjoy the legal and peaceful
possession of the thing
REQUISITES OF BREACH OF WARRANTY AGAINST EVICTION:
1. buyer is evicted in whole or in part from the subject matter of sale
2. there is a final judgement
3. basis of eviction is a right prior to sale or an act imputable to vendor
4. seller has been summoned in he suit for eviction at the instance of
rd rd
buyer; or made 3 party defendant through 3 party complaint
brought by buyer
 no appeal needed nor a need to resist eviction for right to accrue; enough
that aforementioned requisites are complied with
 warranty cannot be enforced until aforementioned requisites concur
 applies to judicial sale; judgement debtor responsible for eviction unless
otherwise decreed in judgement
 vendor not liable for eviction if adverse possession had been commenced
before sale but prescriptive period is completed after transfer
LIABILITY OF SELLER: (eviction w/c caused buyer to lose whole subject matter)
1. value of thing at time of eviction ( whether or not -/+ of price of sale )
2. value of income of fruits
3. cost of suit which caused the eviction
4. expenses of contract if buyer paid for them
5. damages & interests and ornamental expenses if sale was made in bad faith
RIGHTS OF BUYER WHEN DEPRIVED OF ONLY PART OF THE SUBJECT MATTER BUT
WOULD NOT HAVE BOUGHT SUCH PART IF NOT IN RELATION FOR THE WHOLE :
1. rescission
2. mutual restitution
3. WARRANTY AGAINST ENCUMBRANCES (non- apparent) requisites:

a. immovable sold is encumbered with non – apparent burden or servitude not
mentioned in the agreement
b. nature of non – apparent servitude or burden is such that it must be
presumed that the buyer would not have acquired it had he been aware
thereof
 when breach of warranty exist: buyer may ask for rescission or indemnity
 warranty not applicable when non – apparent burden or servitude is recorded
in the Registry of Property – unless there is expressed warranty that the thing
is free from all burdens & encumbrances
4. WARRANTY AGAINST HIDDEN DEFECTS

 SELLER does not warrant patent defect; caveat emptor
 Except when hidden
a. subject matter may be movable or immovable
b. nature of hidden defect is such that it should render the subject matter
unfit for the use of which it was intended or should diminish its fitness
c. had the buyer been aware, he would not have acquired it or would have
given a lower price
 when defect is visible or even if visible if the buyer is an expert by reason of
his trade or profession, seller is not liable
 obligation of seller for breach depends on whether he has knowledge of such
defect or not
a. seller is aware – seller should return price & refund expenses of contract
with damages
b. seller is not aware - seller should return price and interest & refund
expenses ( no damages )
 buyer may elect between withdrawing from contract or demanding
proportionate reduction of price with damages in either case
 applicable to judicial sale except judgement debtor not liable for damages
 action to prescribe 6 months from delivery of subject matter
5. DEFECTS ON ANIMALS
 even in the case of professional inspection but hidden defect is of such nature
that expert knowledge is not sufficient - defect shall be considered as
REDHIBITORY
1. if vet fails to discover through ignorance or bad faith he is liable for damages
a. sale of animals on teams ( 2 or more )
when only one is defective, only one is redhibited & not the others
exception: when it appears that purchase of team will not be done without
the defective one
 apply to sale of other things
b. sale of animals at fair or public auction
 no warranty against hidden defects
c. sale of animals with contagious disease is void
d. sale of unit of animal
 void if use / service for which they are acquired has been stated in the
contract and they are found to be unfit thereof
 prescription of action: 40 days from date of delivery to buyer
 if sale is rescinded, animals to be returned in same condition when they
are acquired; buyer shall answer for injury / loss due to his fault
 buyer may elect between withdrawing from sale or demanding
proportionate reduction of price with damages in either case
D. SPECIFIC IMPLIED WARRANTIES IN THE SALE OF GOODS

1. Warranty as to fitness & quality; requisites:
a. buyer makes known to seller the particular purpose for which goods are
acquired and it appears that the buyer relied on the seller’s skill or judgement
b. goods are bought by description from seller who deals in goods of that
description
 no warranty unless there is stipulation in case of sale of specified article
under its patent or trade name
 measure of damage: difference between value of goods at time of delivery
and value they would have had if they had answered to the warranty
2. Sale of Goods by sample

 If seller is a dealer in goods of that kind, there is an implied warranty that the
goods shall be free from defect rendering them unmerchantable which would
not be apparent on reasonable examination of the sample
E. EFFECTS OF WAIVER
 Parties may increase or diminish implied warranty against eviction; but effect
depends on good faith or bad faith on the part of the seller.
1. seller in bad faith & there is waiver against eviction – null & void
2. buyer without knowledge of a particular risk made general renunciation of
warranty – not waiver but merely limits liability of seller in case of eviction
(pay value of subject matter at time of eviction)
3. buyer with knowledge of risk of eviction assumed its consequences & made a
waiver – vendor not liable (applicable only to waiver of warranty against
eviction)
 when goods delivered to buyer he cannot rescind sale
 if he knew of the breach of warranty when he accepted goods without protest
 if he fails to return or offer to return goods to seller in substantially as good
condition as they were at time ownership was transferred
 when goods deteriorated, buyer can still return them in that condition if such is
due to breach or warranty
F. BUYER’S OPTION IN CASE OF BREACH OF WARRANTY

1. Accept goods & set up breach of warranty by way of recoupment in diminution or
extinction or the price.
2. Accept goods & maintain action against seller for damages
3. Refuse to Accept goods & maintain action against seller for damages
4. Rescind contract of sale & refuse to receive goods/return them when already
received.

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Conditions and Warranties Outline

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CONDITION & WARRANTIES

B. EXPRESS WARRANTIES ( REQUISITES )

3. WARRANTY AGAINST ENCUMBRANCES (non- apparent) requisites:

4. WARRANTY AGAINST HIDDEN DEFECTS

D. SPECIFIC IMPLIED WARRANTIES IN THE SALE OF GOODS

2. Sale of Goods by sample

F. BUYER’S OPTION IN CASE OF BREACH OF WARRANTY

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