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Conditions vs Warranities

Updated on November 30, 2015

What is the difference between conditions and warranties? Why do we need to distinguish between the two?

Before looking at the difference between conditions and warranties we must first look at what is a breach of contract. As I’ve learned through research, once there is a contract and both parties know what is expected of them then you can proceed in settling any disputes that may arise between the parties. Once each person involves performs exactly what was agreed upon then there will be no problems. However, if one of the persons involves does not perform or complete the action of duty that was promised and agreed upon then there may be a breach of contract. This can result in the innocent party obtaining some type of reward or compensation from the accused. The only exclusion to this rule is if both parties have agreed not to enforce the original contract for some reason or if something unexpected, like death of one of the parties for example, has happened which makes performance impossible.

Now we have to look at breach of condition along with breach of warranty. According to research, not every breach in contact has to be seen as the end of a contract for the innocent party. The terms of a contract can be divided into important terms which includes the conditions and then the less important term which is the warranties. The main difference between conditions and warranties is that conditions are seen as more important. Once a party has a breach of condition then and only then can the other party treat that contract as a rejection thus ending the contract resulting in him discharging his own liability or in other words his part of the agreement. But once there is a breach in warranty the innocent party can sue for damages. However, the contract is still good and he/she is still liable to complete their obligations.

Also, when looking at a breach in condition you must also consider the breach and time of performance. If a party does not perform his major obligation then he is in breach of condition. As we’ve learned before non-performance of a minor obligation can be seen as a breach of warranty. But the question that arose from research was “What if the party does a complete his obligation but is late in doing so?” Does this mean that the contract has ended? The only way to answer this question is if you first find out the intentions of the parties. If the parties involves intend time to be an important factor in the contract then late performance can be seen as a serious breach of condition. If late performance does arise then that will only give rise to an action for damages.

An example of breach of condition along with breach of time can be seen in the case of Charles Rickard Ltd vs Oppenhem (1950) where the plaintiffs agreed to build a car for the defendant and to deliver it, at the latest, within seven months. The car was not completed on time, but the defendant said that he still wanted it when finished. Three months later the defendant told the plaintiff that he would only wait one more month for the car. The month elapsed and he bought another car elsewhere. Subsequently the car was completed but the defendant refused to accept delivery. The court held that the time was of the essence originally but the defendant had waived this by being prepared to accept the late delivery after the seven months had elapsed. However, by setting the deadline one month after the original seven months, the defendant had again made time of the essence. There the final late delivery was seen as a breach of condition by the plaintiff and the defendant did not have to accept delivery of the car as his liability was discharged.

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