Condition of contract

A condition, as opposed to a warranty, is part of the root of the contract.

A condition is an essential stipulation in a contract which a party promises to perform or fulfil. A condition, as opposed to a warranty, is part of the root of the contract and allows the injured party to rescind and/or seek damages. For instance, in a contract for a shipment to be delivered where time is stated to be 'of the essence', the term stating the deadline for shipment would probably be a condition

A breach of such a term (i.e. the condition of the contract) permits the innocent party to terminate the contract such that the parties have no further obligations to perform the contract and claim damages for losses suffered as a result of the breach. 

Thus conditions of contract are at the very root or substance of what the parties agreed, and are so essential to the agreement that the failure to perform or perform improperly by the other party may be considered a substantial failure to perform the contract at all.

In a contract for the sale of goods, if the warranty is breached the purchaser is entitled to claim for damages. It does not give the purchaser the right to turn down the goods and treat the contract as repudiated.

Warranties may be express or implied.

It is important to differentiate between a warranty and a condition as there are usually different remedies according to whether a warranty is breached or a condition is breached.

Breach of warranty;

An innocent party is only entitled to sue the party in breach of a warranty, for damages for the breach of warranty.

Breach of condition;

An innocent party in breach of a condition of contract may elect to

  1. accept the breach and sue for damages, or

  2. Terminate the contract (for the other party's repudiation of the contract) and sue for damages. 

before terminating a contract however, the innocent party must not have accepted the breach by conduct or words.

Also, stipulations in contracts may be conditions of the contract although they are named as warranties in the agreement.

It may be that the contract will just state whether a term in the contract is a condition or a warranty.

If it is not clear within the contract it will be decided based on the intention of the parties at the time the contract was made.



Related Items

The items below list this as being related in some way.

Amazon's recommended Books

RSS Feeds