247. Warranties. A warranty is an undertaking on the part of the seller that the goods possess certain qualities. The distinction between a condition and a warranty is that the former may suspend, rescind, or modify the principal obligation, while the latter is a separate or additional undertaking on the part of the vendor.

"A warranty is a separate, independent, collateral stipulation. on the part of the vendor, with the vendee, for which the sale is the consideration, for the existence or truth of some fact relating to the thing sold."

As to whether a stipulation is a condition or a warranty, depends largely upon the intention of the parties. Any stipulation may be made a condition precedent to the passing of title, or it may be agreed to be a warranty. Warranties are classed as express and implied.

1. Express. Warranties are express when the collateral undertaking is fully understood as being an undertaking in part for the consideration. It must enter into and form part of the agreement; that is, it must be an inducement in bringing about the contractual relationship. If the party to whom the warranty is made knows that statements thereto are untrue, the warranty will be of no force. The expression of an opinion as to certain qualifications an article possesses is not ordinarily a warranty, nor are commendatory statements made by a salesman to be construed as warranties. The warranty, to be valid, must be made at the time the contract is made. However, an agreement of warranty entered into subsequent to the making of the original contract will be valid if a distinct consideration is given for it.

2. Implied. An implied warranty is a warranty not expressly stated at the time the original contract is made, but from circumstances it is presumed to have been taken into consideration in the contract formation. The seller of goods impliedly warrants that he has title and authority to sell. If the seller has no title, having received the goods innocently or otherwise from another, he conveys no title; the buyer may return the goods and

demand the return of the purchase price; he may also do so if he is deprived of possession by the lawful owner.

The seller of provisions also impliedly warrants that they are wholesome and fit for domestic use.

248. Caveat Emptor. This is a rule of wide application, "Let the buyer beware." The purchaser must, when he has the opportunity, rely largely on his judgment. Defects of a patent nature are not covered by a warranty, but latent ones are covered by an express warranty.

In sales on trial title does not pass until all tests and conditions have been fulfilled.

In sales by sample the distinguishing characteristic is that the bulk shall be of the same grade or quality as the sample.

A chattel mortgage is a conditional transfer of title given as a security for the discharge of a note or other obligation.

Upon payment of the debt the mortgage is discharged and released, and upon a failure to pay the mortgage it may be foreclosed and the property sold to satisfy the debt.

A warranty is an undertaking by the seller that the goods possess certain qualities. A warranty is express when it is fully understood as being an undertaking in part for the consideration. It is implied when, although not expressly stated at the time of making the contract, it is presumed from the circumstances that a warranty has been taken into con sideration.

The rule of caveat emptor ("let the buyer beware") is that the pur. chaser buys at his own risk.

For a breach of warranty, the purchaser may bring suit for damages.

250. QUESTIONS

Discuss "sales on trial." What are the rights of a purchaser in "a sale or return"? What are the conditions of a sale by sample?

Discuss the rights of the parties under a chattel mortgage.

What is a warranty? Distinguish between a warranty and a condition. When is a warranty express? When implied?

What is the doctrine of caveat emptor?

When do you return goods and when do you sue for damages?

251. Sellers. The seller's first right is to demand payment as a condition precedent to the delivery of the goods. If the goods have been delivered he has a claim against the buyer personally, for the debt. If the possession has not been transferred to the buyer the seller has the right to a lien, i. e., to retain possession till payment is made. In order to exercise the right of lien, payment for the goods must be due, for if credit has been given, the seller has no right to hold the goods. If payment in part has been made and the balance is due, the seller may hold part or all of the goods for the balance due. He has not the right to hold, on an old balance of account, particular goods that have been paid for. The merchant's right of lien is the right to hold goods for claims and charges on those particular goods.

1. Stoppage in Transit. This is an extension of the right of lien. As long as goods are in the hands of a common carrier

or warehouseman, who receives them from the seller, they are constructively under the control and direction of the seller. Three conditions are necessary for the proper execution of this right by the seller: (1) there must be a balance due on the goods; (2) the goods must be in the hands of an intermediate party; (3) the buyer apparently must be in financial difficulties.

A, of New York, sells B, of Chicago, a bill of goods on sixty days' credit. The goods are receipted for by the New York Central Railway Company. The day following the shipment A learns that B has failed in business. A immediately sends a notice to the Railway Company in New York, directing it to hold the goods subject to his order and not to deliver the goods to B. The three conditions have been complied with and A has regained constructive possession. The financial difficulty of B need not go to the extent of bankruptcy; a failure to pay paper due is sufficient. If in the above case B had given personal directions to the common carrier or exercised ownership prior to shipment, A could not have exercised the right of stoppage in transit. When stoppage has been effected, the buyer has the right to tender the price and demand the goods.

2. Sale. The exercising of the right of lien or stoppage in transit does not affect the contract or the passing of title. In either case the seller must be given a proper remedy to enforce his rights. Such a one is furnished him in the right to re-sell the goods and hold the buyer liable personally for any deficit. If the goods sell for more than the purchase price and charges, the difference is to be paid to the buyer.

252. Rights of Buyers. So far we have discussed the rights of the seller. The principal right of the buyer is the right to demand possession of the goods, subject, however, to any condition precedent. If the goods are sold for cash, he must first make tender before demanding possession.

1. Specific Performance. In very exceptional cases the right of specific performance of the contract may be enforced by the buyer; but as a rule he must satisfy himself by a claim for

damages. Thus, if he can show that these particular goods are not only necessary but are the only available ones, specific performance may be had. So, if the article is one of an historical nature, as an heirloom, the loss of which could not be compensated by money, the purchaser may have specific performance of the contract.

253. Breach of Conditions. A condition may be contained in the contract and, if violated, the contract may be treated as at an end, and the buyer is not obliged to receive the goods; if they have been delivered, he may return them or even refuse to exercise ownership over them. This rule is equitable and works in favor of either party. The injured party has a claim against the wrongdoer for damages.

254. Breach of Warranty. It must be kept in mind that a warranty is a separate contract, the breach of which does not avoid the sale unless fraud can be shown. The buyer is not at liberty to return the goods but must seek his remedy in damages. The claim for damages operates as a recoupment against the selling price if not paid, and as a personal claim if payment has been made.

The first right of the seller is to demand payment as a condition precedent to delivery.

Stoppage in transit is the right of the seller to take the goods before final delivery. Three things must co-exist as conditions precedent to the exercise of the right: (1) There must be a balance due; (2) the goods must be in the hands of an intermediate party; (3) the buyer must be in financial difficulties.

The right of lien or stoppage in transit does not affect the operation of the contract; title passes notwithstanding. In cash sales the buyer may tender payment and demand possession.

Specific performance is the right to enforce the carrying out of the contract in accordance with its terms.

For a breach of a condition the contract may be treated as at an end and the goods returned.