This article has been written by Smitha Nair pursuing a Diploma in International Contract Negotiation, Drafting and Enforcement from LawSikho.

 This article has been edited and published by Shashwat Kaushik.

Introduction

In a consumer oriented society, products and services are extended with warranties with regard to the quality, durability, performance and nature of the product or service. These warranties may be either express or implied. Breach of an express warranty invites legal implications. In this article, we will briefly explore the nuances of express warranty.

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Condition and warranty

Before getting into the topic of express warranty, we need to understand what a condition and warranty are in a contract of sale for a product/goods. Express warranty in India finds its roots in the Sales of Goods Act of 1930. Section 12 of the Sale of Goods Act of 1930, explains condition and warranty. A buyer buys a product depending on some conditions and warranties stipulated in the policy of the sale contract. After verifying the same, if the buyer feels that it meets his or her requirements, he/she will buy the product. 

As per Section 12, a condition is a stipulation where the seller or manufacturer gives an affirmation or a promise that the particular good is made for a particular purpose and the product is absolutely fit for that particular purpose. This forms the main part of the contract between the seller/manufacturer and the buyer and if any breach of this stipulation occurs, the contract of such a nature is treated as repudiated and the buyer can reject the product/good and claim the price for loss/damages. 

Whereas warranty is only treated as collateral to the main condition, the breach of which will not entitle the buyer to reject the product/good completely, damages can be claimed to the extent of the loss earned by the buyer, and the remaining part of the contract can still be completed. Furthermore, the section explains the distinction between condition and warranty in a contract of sale. 

Whether the stipulation given in a product/good is a condition or a warranty can be ascertained by the construction of the contract. Sometimes the condition given may be a warranty and vice versa. So the construction of the contract distinguishes the condition from a  warranty.

For example: A, a buyer, approaches a truck dealer, B, to purchase the same for conveying vehicles to different parts of the country. B suggests a medium quality truck for A to purchase. A, after going through the conditions, was impressed that the conditions given in the policy of the contract of sale of the truck fulfilled his requirements, and he bought the truck. Later, A finds that the truck is not fit for carrying vehicles but for other purposes only. A approaches for the return of the truck and the recovery of money from B. Here, the stipulation is regarding the performance of the truck, which is not fulfilled as per the condition given in the contract of sale. Hence, the buyer has incurred the right to return the vehicle and claim damages. A breach of condition gives rise to product liability for the seller and this breach of condition can either be treated as a breach of condition or of warranty, depending on the construction of the contract of sale.

Laws of express warranty

Express warranty is explained in both the Sale of Goods Act of 1930 (previously part of the Indian Contract Act of 1872) and the Consumer Protection Act of 2019. 

In the Sale of Goods Act of 1930, express warranties are explained in Section 37. As per Section 37, express warranties are those warranties that are expressly given, whether oral or written, regarding the quality, standard and safety of the product or service in the policy of the contract of sale or service. The seller of the product/goods or the service provider expressly gives such a warranty that, in case of a faulty product or service or if the product or service does not work as per expectations or the warranty given, the seller assures to repair, replace or refund the same within a stipulated period of time. Based on these warranties, the buyer buys the product or avails of a service. 

In the Consumer Protection Act, 2019, the term express warranty has been expressed in an inclusive manner. Section 2 of the said Act explain express warranty that any material statement, affirmation of fact, promise or description warranting that it conforms to such 

material statement, affirmation, promise or description and includes any sample or model of a product, the whole of such product conforms to such sample or model. 

Express warranty encompasses any material statement, an affirmation of a factual representation, promise or description concerning the product/good asserting that the product/good conforms to such material statement, affirmation, promise or description and this material statement, affirmation, promise or description includes not only a sample or model of a particular product/good but also applies to the entirety of that specific product.

In Indian law, the consumer’s rights mainly originate from the contract law of warranty and the tort law of negligence and strict liability. The law is grounded in the principle “caveat emptor,” meaning “let the seller beware” (Section 16, Sale of Goods Act of 1930) . This rule places the seller accountable for any inconvenience caused to the buyer arising from the purchase of the product/goods or the utilisation of any services. There was ambiguity in the laws before the introduction of the Consumer Protection Act of 2019, regarding the provision of compensation to consumers. Therefore, a complete chapter was introduced in this regard, which provides detailed information on the liabilities of product manufacturers, sellers, and product service providers. Section 84 of the said Act clearly mentions that a deviation from express warranty is one of the grounds for a product liability claim. 

Now the question arises how do we distinguish a breach of express warranty from a breach of condition. There are situations in which we can consider a breach of condition as a breach of express warranty.

For example:

A, the buyer, approaches shopkeeper B to purchase a high quality product priced at Rs.999/. However, B, the shopkeeper, suggests an alternative product of slightly lower quality with a price of Rs.799/-. A decides to purchase the lower-quality product with a price difference of Rs.200/-. Here, the buyer has the option to either reject the product and claim a full refund or keep the product and seek damages to the extent of the loss incurred.

The above scenario is called a voluntary waiver by the buyer.

Another example of a breach of condition resulting in a breach of express warranty is the acceptance of goods by the buyer.

If the buyer is given the option to verify the product before buying or accepting the goods/product and the buyer buys without verifying the conditions of the contract for sale, then after receiving the product, if the buyer finds there’s a defect in the product or if it is of low quality, then the buyer has no right to reject the product. Here, the condition becomes a warranty, hence the breach of express warranty.

Modern concept in commerce and relevance of product or service liability

As we can observe, the traditional marketplace still retains its pomp and grandeur, and with the modernisation of marketplaces, accessibility has reached new heights. The advent of the internet and online platforms has significantly expanded the availability of goods and services, bringing convenience to a whole new level. Simultaneously, it increased the fraudulent practices and sale of products based on misleading information, which leads to a breach of warranty. In this scenario, advertisements play a big role in the express warranty of the products. People believe such advertisements and buy the products. A breach of express warranty happens in most cases when conflict arises as advertisements give misleading information and the actual product and contract of sale of the product give different information and experiences to the buyer.

E-commerce

Another scenario is ecommerce. In the largest consumerist society, like India, new e-commerce companies emerge on a daily basis. These e-commerce companies commonly provide express warranties for their products, primarily due to the nature of online shopping, where customers lack the opportunity to physically try on or examine merchandise before making a purchase.

The way the product functions and appears upon receipt can significantly deviate from the customer’s initial expectations during online browsing. The incorporation of an express warranty provides them with a kind of assurance that any issues with the purchase will be addressed in some way, whether by way of refund, repair or replacement.

To give an example, a buyer buys an outfit online but upon arrival, he discovers that the outfit is of the wrong size and colour or of poor quality. Since there’s an express warranty, the consumer has the right to a refund or replacement.

Nowadays, the sale of electric vehicles is also done online. Manufacturers and sellers commonly promote specific warranties for repairs on the vehicles they sell, often outlining the conditions related to mileage and restricting the duration of ownership and the scope of coverage. Once the vehicle has been owned for a specified duration or driven beyond the mileage limit, the applicability of the express warranty ceases. In most cases, a claim for product liability arises due to the express warranty provided in the contract of sale. In this scenario, the express warranty functions as a shield for the buyers to get redressed.

Case laws related to the breach of express warranty

Case laws related to breach of express warranty derive mostly from breach of warranty of contract, negligence and strict liability of tort. 

In the most iconic case of G. Mckenzie & Co. (1919) Ltd. vs. Nagendra Nath Mahalanabish (1945), this has been highlighted as two independent causes of action giving rise to damages to the customer, one in the law of contract against the seller and the other in the law of tort as to the manufacturer. 

The dependence on contractual arrangements becomes more evident when examining the case of Ernit Everest Ltd. vs. C.G. Abraham (2003). In this case, the manufacturers of faulty asbestos sheets were deemed accountable under Section 16 of the Sale of Goods Act, as the seller was recognised as the agent of the manufacturers. This establishes a distinct contractual connection between the manufacturer and the consumer.

Brown vs. Ford Motor Co. (1988)

In the landmark case of Brown vs. Ford Motor Co. (1988), the Court ruled in favour of the plaintiff, who had filed a lawsuit against the defendant automobile manufacturer. The plaintiff’s complaint alleged that the manufacturer had breached its express warranty by falsely advertising that the car purchased by the plaintiff had a “fuel-efficient engine.” The court agreed with the plaintiff’s assertion, finding that the vehicle’s actual gas mileage was significantly worse than what had been advertised.

Throughout the legal proceedings, the court meticulously examined the evidence presented by both parties. The plaintiff provided compelling documentation demonstrating the discrepancy between the advertised fuel efficiency and the car’s actual performance. On the other hand, the manufacturer put forth various arguments in its defence, attempting to justify the difference in gas mileage. However, the court was not persuaded by the manufacturer’s explanations and ultimately concluded that the manufacturer had made false and misleading statements regarding the vehicle’s fuel efficiency.

As a result of the court’s decision, the manufacturer was held liable for breaching its express warranty. The court awarded the plaintiff damages to compensate for the financial losses incurred due to the car’s poor fuel economy. This case set a significant precedent in consumer protection law, emphasising the importance of accurate and truthful advertising by manufacturers.

Jarvis vs. Swan’s Down Cake Shop (1959)

In the landmark case of Jarvis vs. Swan’s Down Cake Shop (1959), the Court grappled with the issue of express warranty in the context of food labelling. The plaintiff, Ms. Jarvis, alleged that the defendant bakery, Swan’s Down Cake Shop, had breached its express warranty by falsely advertising a cake as containing “fresh, ripe strawberries.”

The facts of the case revealed that Ms. Jarvis had purchased the cake in reliance on the bakery’s advertisement, which prominently featured an image of a luscious strawberry cake and the words “fresh, ripe strawberries” in bold letters. However, upon consuming the cake, Ms. Jarvis discovered to her dismay that the strawberries were not fresh or ripe at all, but were in fact canned strawberries.

Ms. Jarvis promptly filed a lawsuit against the bakery, alleging breach of express warranty. The bakery defended its actions, arguing that the advertisement was merely a “puff” or an exaggeration and not a legally enforceable promise. The bakery also contended that Ms. Jarvis had failed to mitigate her damages by not returning the cake or requesting a refund before filing the lawsuit.

The trial Court rejected the bakery’s arguments and ruled in favour of Ms. Jarvis. The Court found that the bakery’s advertisement constituted an express warranty that the cake contained fresh, ripe strawberries. The court also held that Ms. Jarvis was not required to return the cake or request a refund before filing the lawsuit, as she had already suffered damages by consuming the cake with the expectation that it contained fresh strawberries.

On appeal, the California Court of Appeal affirmed the trial Court’s decision. The Appellate Court agreed that the bakery’s advertisement created an express warranty and that Ms. Jarvis had reasonably relied on that warranty when purchasing the cake. The Court also rejected the bakery’s argument that Ms. Jarvis had failed to mitigate her damages, finding that she had acted reasonably in filing the lawsuit after discovering the breach of warranty.

Jarvis vs. Swan’s Down Cake Shop case serves as a caution for businesses regarding the importance of accurate and truthful advertising. It also underscores the rights of consumers to rely on express warranties made by businesses and to seek legal remedies for breaches of those warranties.

Jones vs. Sears, Roebuck & Co. (1970)

The case of Jones vs. Sears, Roebuck & Co. (1970) is a landmark decision in the area of product warranties. The case involved the purchase of a water heater from Sears, Roebuck & Co. that was advertised as having a “lifetime warranty.” However, when the water heater broke down after a few years, Sears refused to honour the warranty, claiming that the warranty was only valid for the original purchaser and was not transferable to subsequent owners.

The plaintiff in the case, Mr. Jones, argued that the warranty was an express warranty and that Sears was therefore liable for breach of warranty. The Court agreed with Mr. Jones, finding that the advertisement for the water heater created an express warranty that the water heater would last for the lifetime of the original purchaser. The Court also found that Sears had breached this warranty by refusing to honour it.

The Court’s decision in Jones vs. Sears, Roebuck & Co., is significant for several reasons. First, it established that express warranties can be created through advertising. Second, it held that manufacturers and retailers are liable for breach of warranty if they fail to honour express warranties. Third, it provided guidance on the interpretation of lifetime warranties, holding that such warranties are valid and enforceable.

The Jones vs. Sears, Roebuck & Co. decision has been cited in numerous subsequent cases involving product warranties. It has also been influential in the development of state laws governing product warranties. As a result of this decision, consumers are better protected when it comes to product warranties.

Conclusion

As we conclude, it is to be noted that the law of express warranty has a far and wide reach in consumerist society. The law related to express warranty has developed through case laws as well as statutes. Today, people have become more aware of the fact that the law of express warranty and the breach of the same ensure legal rights for consumers to avail compensation and redressal, along with refunds, repair and replacements.  We should acknowledge that the role of e-commerce is significant and popular in this regard. 

References

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