1. Definition of Condition
2. Definition of Warranty
3. Condition Versus Warranty in a Contract
4. Terms Classified by Statute

Warranty and condition in contract law refer to specific stipulations set in a contract of sale. A contract is an agreement that takes place between two parties to complete a mutual transaction. Warranty and condition include the specific features of those terms. It is important to understand the difference between the two definitions.

Definition of Condition

Drafting a legal contract requires clear and specific conditions. The conditions are the actions or steps that one or both parties will do to fulfill their side of the contract. The conditions are a requirement based on the contract agreement. There are two types of conditions present in a typical contract:

  • Expressed Condition: These are conditions that are clearly defined and agreed to.
  • Implied Condition: These are conditions that are not verbally discussed but are expected to be a part of the contract. Implied conditions might include the title of goods sold, the quality of the goods, condition of completeness, and a sale by description.

Definition of Warranty

A warranty is a guarantee as to the quality of the goods or services sold that are included in the contract. A warranty can also be expressed or implied. Warranties back up statements about sold products or goods. If a warranty claim proves to be false, solutions include:

  • A refund
  • A full void of the contract

Warranties are also available either:

  • With a time limit
  • For the entire life of the goods

However, the time requirements should be included in the contract.

Condition Versus Warranty in a Contract

Goods are the subject matter in a contract of sale. Millions of goods are sold on a daily basis, and understanding the difference between a warranty and a condition is important. A contract of sale lists the exact provisions needed to be complete in order to abide by the contract. These requirements could be either in the form of a warranty or a condition.

Conditions are the set stipulations of the contract, whereas warranties are considered to be an additional set of rules. They both might have time requirements, but the time limits set on the conditions of the contract are legally enforceable. Warranties are usually a specific term within the contract's conditions that are a written promise.

Knowing the difference between the two terms is important for:

  • Liability
  • Termination reasons

If a condition within the contract is breached, the innocent party may have the right to terminate the contract. They can also claim damages or may choose to continue to keep the contract in effect. A breach of warranty is often not enough to terminate a contract, but it could lead to damages claimed. Of course, it is always important to seek legal advice when dealing with a breach of warranty or condition within a contract.

Terms Classified by Statute

It is not always clear as which contract terms are conditions and which are warranties. Statutes can determine which terms are considered to be a contract condition or a warranty. Many legal jurisdictions follow The Sale of Goods Act of 1979. This legal act stipulates that:

  • Characteristics of goods sold, including descriptions, quality, and fitness, are often included as conditions.
  • Characteristics such as the enjoyment of goods and a lack of encumbrances are usually considered to be warranties.

Other conditions can also affect the classification of a condition and a warranty. For example, whether the contract is of a consumer or a commercial contract will also affect the specific term definitions. Other terms might be classified as intermediate terms. Intermediate terms are those that do not fit perfectly into either the conditions or warranties categories.

You can avoid confusion as to term definitions by including which category each lies under in the contract draft. However, if the contract does not distinguish which falls into each type, the following actions are taken:

  • The court will evaluate the statute or case laws.
  • The court will evaluate the breach of contract and damage terms. A breach of conditions can lead to contract termination while a breach of warranties does not.
  • The court can also identify contract stipulation mistakes and change the classification terms.

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