Conditions and warranties

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Contract Law

Traditionally a term of a contract -- whether an express or an Implied term -- can be classified as representation, warranty, and condition.

A representation is something that is offered in order to induce the other party to contract; it is, in a way, independent of the contract itself. If I offer to sell you my car, saying that 'you won't find a nicer Ford Fandango in London', no sensible person would assume that I intent to be contractually bound by that statement. Representations are frequently referred to as 'mere puff'. Of course, if it demonstrably false, the statement may be a Misrepresentation.

A warranty, traditionally, is a term which is not fundamental to the contract and, if breached, does not give the injured party the right to repudiate. He may, of course, have a right to Damages.

A condition is a term which, when breached, allows the injured party to treat the contract as discharged. Here too there may be a remedy in damages, but also the injured party is freed from his obligations under the contract.

More recently, the courts have started to recognise the existence of 'innominate terms'. These are terms whose status as conditions or warranties is not defined by the construction of the words, or the intentions of the parties, but on the effect that breach would have. This usage appears to follow from The hongkong fir (1961), in which Lord Diplock described how a contractual term could be treated as a condition or a warranty.

How are terms distinguished from warranties? This is not always easy; where there is no statutory assistance (e.g., Sale of goods act (1979)) the courts will have to assess the intentions of the parties. Of course, the parties themselves have the right to make specific terms into absolute conditions in the wording of the contract; however, following Lschuler ag v wickman machine tools ltd (1973) it appears that such wording is only one factor that courts will consider when assessing whether a term is a condition or not.