Conditions and Warranties

• Terms of a contract are classified into two types - conditions and warranties 
• A condition is an essential terms of the contract . The breach of any condition entitiles the innocent party to repudiate the contract and also claim for damages. 
• A warranty is a collateral term of the contract . The breach of any warranty entitiles the innocent party to claim for damages only , but not the right to reject the goods and treat the contract as repudiated . 
• Whether a term in a contract is a condition or a warranty depends on the intention of the parties . 
• Example of a condition : " The Contractor shall execute and complete the works in accordance with the contract drawings and specifications ." 
• Example of a warranty : " If the Contractor fails to complete the works by the Date for Completion , then the Contractor shall pay to the Employer liquidated and ascertained damages based on the agreed rate ."