Condition vs. Warranty

In a fictitious scenario of an entirely imaginary world of English Law breach of “Condition” is personified as Batman within the realm of contract law. Much like Batman, Condition is to guarantee that promises and representations made under a contract are upheld with integrity and performed in good faith.  If we were to take the same strange and wonderous metaphor to “Warranties” taking on a persona of Robin, Warranty is a supportive companion of Condition, offering additional assurances and parties’ reinforced commitment. 

Warranty and Condition are not the same, serve different roles, although are, more often than not, conflated with each other.  To set the record straight:

Condition is a fundamental term or requirement of a contract that, if not fulfilled, could allow the contract to be terminated. Simply not satisfying a condition to a contract does not ordinarily lead to remedies or claims of damages.  However a breach of conditions in this context can lead to legal consequences to the offending party(ies).  To keep with the metaphor, attack on Gotham by any of the many villains in Batman movies caused the main hero to take active and decisive action and to hold the offending party(ies) accountable (and/or terminate them, in the spirit of most vigilante movies).

Moving away from the Batman metaphor for a moment, an example of a condition in property law is purchaser’s finance with, say, 10 working days of date of the agreement (clause 9.1 of General Terms of Eleventh Edition 2022(3) of ADLS Webforms).  Naturally, finance is a crucial requirement of a purchase and, if purchaser is unable to secure sufficient funds, they are entitled to terminate the contract.  In this instance, the vendor would have to refund the deposit (if any) and would have no recourse to claim any loss or damages for the valid termination.  However, if the finance condition is satisfied, but the purchaser has a change of mind and tries to cancel, that would be a repudiatory breach and the vendor would have remedies for loss and damages.

Warranty is the lesser but no less important sidekick of Condition.  It is a promise and a voluntary assurance, wider in scope and duration. Breach in this instance can lead to legal remedies such as repair, replacement or compensation made available to the innocent party, but not termination

An example of a warranty in property law is vendor warranting that the property is up to Healthy Homes Standards, i.e. it meets minimum standards for heating, insulation, ventilation, moisture ingress and drainage, and draught stopping in rental properties.  If the purchaser discovers that not to be true prior to settlement, the vendor could be held to account to ensure all such repairs and improvements to bring the property up to standard, but would not ordinarily have the right to cancel the contract 

Therefore a condition, may empower cancellation but as it gives no other recourse to the “innocent party” it can sometimes hold less accountability or enforceability than the underdog of warranty which obliges a party to perform regardless. Warranty and Condition (just like Robin and Batman in movies), have their time and place that, combined, can provide parties with comprehensive protection, enhance trust and reliability of a contract as long as you know which one to use when

For proper legal advice and to ensure you are best protected before you sign a contract, please contact Polina Boyarchenko, or our Property & Disputes Team who can assist.

Disclaimer:
We have taken care to ensure that the information given is accurate, however it is intended for general guidance only and it should not be relied upon in individual cases. Professional advice should always be sought before any decision or action is taken.