Condition
The word condition is used in two senses. In the first sense it means a term or a stipulation in a contract which is absolutely essential to its existence, the breach of which entitles the injure party to repudiate the contract and to treat it as discharged. In other words, a condition is a term of major importance which forms the main basis of the contract, the breach of which normally gives the aggrieved party a right, at his option, to repudiate the contract and treat it as having ended.
In the second sense, a condition is a qualification which renders the operation and consequences of the whole contract dependent upon an uncertain future event; such conditions are either precedent or subsequent. A condition precedent is one which must occur or be fulfilled before an obligation or right created by the contract can be enforced. In PYM V Campbell (1910) K.B. 1012 where under a written contract, the defendant’s promise to buy a share in the plaintiff’s invention was, by an unwritten understanding made subject to the approval of a third party. It was held that, until the approval was given, he defendant was under no obligation to buy. In other words, the contract was unenforceable in the absence of the desired approval which was the condition precedent. A condition subsequent on the other hand is a statement of the circumstances in which the obligations under a contract may be prematurely terminated after the transaction has been embarked upon.
In Head v. Tattersall (1971)L.R. 7 Exh. 7, the plaintiff bought a horse of a particular description from the defendant, with the understanding that the plaintiff could return it, up to the following Wednesday, if it did not answer the description. The description failed and the plaintiff returned the horse within time. It was held that although a contract had come into existence, the option to return operated as a condition subsequent and the plaintiff was therefore entitled to cancel the contract and return the horse.
WARRANTY
Warranty ordinarily denotes a binding promise, but when it is used in a narrower and technical sense, it means a subsidiary term in a contract (i.e a term of minor importance) a breach of which gives no right to repudiate the contract, but only a right to an action for damages for the loss sustained. It is described in the Sale of Goods Act, 1893 section 62 as: “An agreement with reference to goods which …… (is) collateral to the main purpose of such contract, the breach of which gives rise to a claim for damages, but not a right to reject the goods, and treat the contract as repudiated.”The main difference between a condition and a warranty is that a breach of the former entitles the other party to treat the whole contract as discharged, while a breach of the latter merely entitles the other party to claim damages, but does not absolve him from performing his duties under the contract.