Warranty v Condition

Businesses and individuals alike enter into contracts frequently, whether it be for services or goods for example, and prior to doing so will expressly or impliedly agree terms and conditions of the contract.

The law classifies terms of a contract into two subcategories, conditions, and warranties. This is significant because depending on whether the term is a condition, or a warranty affects the different remedies available through the Courts for the innocent party.

Condition:

A condition is an essential term in a contract or sale and is seen as being of such importance that it goes to the ‘heart’ of the contract. A condition is a key element that defines the rights and the obligations of the parties involved. Should there be non-performance of a condition and the condition is breached, the innocent party is entitled to treat the contract as being at an end and to additionally claim for any damages suffered.

Warranty:

A warranty, though still a term of a contract, is not as important as a condition. Warranties typically provide additional assurances or guarantees regarding the quality, fitness or performance of goods. They typically act as a means to protect the buyer and offer compensation in case the goods do not meet the specified standards or requirements. A breach of any warranty in a contract will only allow the innocent party to claim damages but will not terminate the contract all together.

If you are in the process of agreeing terms and conditions with another party, be clear on what are the fundamental parts of the agreement and know what may happen should there be a breach of either a condition or a warranty. This means knowing both the consequences of a breach of warranty or condition, and the remedies for breach of warranty or condition.

If you have entered into a contract and believe a condition or warranty of this contract has been breached by either yourself or the other party, get in touch with the Commercial Litigation team today.  Alternatively, If you are in the process of agreeing terms and conditions with another party and require assistance please contact our Corporate Commercial department for guidance.