What is a Purchaser’s claim against a Vendor in a sale agreement without a clause on warranties?
A warranty is a legally binding commitment forming part of a sales contract which assures the buyer that the Property is free from defects.
Warranties are requested by the purchaser to assure that the selling entity is in existence and the seller has the right, power and authority to perform his/her/its obligations. The purchaser seeks protection by incorporating a clause on warranties and indemnity.
Section 53 of the Sale of Goods Act addresses the question of breach of warranty. It states: “Where there is a breach of warranty by the seller, or where the buyer elects, or is compelled to treat any breach of condition on the part of the seller as a breach of warranty, the buyer is not by reason only of the breach of warranty entitled to reject the goods; but he may – (a) set up against the seller the breach of warranty in diminution or extinction of the price; or (b) maintain an action against the seller for damages for the breach of warranty.”
Sub-section (2) of this section goes further to state that the measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.
An award of damages for breach of warranty aims to put the claimant in a position he/she/it would have been if the warranty had been true.
In view of the foregoing, the Clause on warranties should be expressly stipulated in the agreement for sale to enable the purchaser to sue for breach of warranty and also claim for damages. In an instance, where the clause on warranties is not included in a sale agreement then the purchaser shall not be in a position to sue for breach of warranty and shall not be entitled to damages.
A sale agreement where the vendor has rejected the inclusion of warranties is quite risky as it does not protect the Purchaser.