As a rule, there are certain conditions and warranties on the part of the seller of goods. A condition is a term which goes directly to the substance of the contract and is so essential to its very nature to the extent that non-performance may fairly be considered by the other party as a substantial failure to perform terms of the contract at all. Thus subject to what is said a breach of condition by one party entitles the other to repudiate the contract.
Whereas, a warranty is an agreement which is collateral to the main purpose of the contract and thought it must be performed, moreover, it is not so vital that failure to perform it goes to the substance of the contract. Based on this, a breach of warranty only gives rise to an action for damages, the party offended therefore cannot repudiate the contract and reject the goods. Like a condition, a warranty is a term of the contract and whether a stipulation as to time e.g., of delivery (the time of delivery usually amounts to a condition) is a condition or warranty depends on the terms of the contract, save that stipulation as to time of payment are never deemed conditions unless a different intention appears clearly.
However, the conditions and warranties implied by law, may be negatived or varied by the express agreement of the parties or their course of dealing, or by usage binding on them. But this freedom of contract preserved by the law may be limited by a party’s default taking the form of a fundamental breach of the contract. The Court will, normally, construe an exemption clause strictly against a party seeking to avail himself of it and it will be no easy matter to secure protection against liability for what would in the absence of such a clause be a serious breach of contract.
In recent years the view had been taken that, there was a rule of substantive law that no exemption clause, however widely drafted, could protect a party in respect of breaches so serious that he could be said to have broken a fundamental obligation of the contract in that he was not carrying out the contract even in a defective and improper manner. All through, the intention of the contracting parties is a cornerstone and needs to be explained so as to escape future difficulties during performance.