Remedy for Breach of Warranty under Section 59 of the Sale of Goods Act, 1930: Diminution or Extinction of the Price, a Suit for Damages, the Measure, and Further Damage

Section 59 sets out what a buyer can do when a warranty is broken, or when a breach of condition has become a breach of warranty because he elected to treat it as one or because he has accepted the goods. He cannot reject the goods for that reason. What he can do is either reduce the price he pays, setting the breach up in diminution or extinction of it, or sue for damages. And if the price reduction does not cover his loss, Section 59(2) preserves his right to sue for the further damage.

1. The Section

Section 59, Sale of Goods Act, 1930

(1) Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such 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) sue the seller for damages for breach of warranty.

(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent him from suing for the same breach of warranty if he has suffered further damage.

2. When Section 59 Applies

A breach of warranty, express or implied, such as the warranties of quiet possession and freedom from encumbrances in Sections 14(b) and 14(c).
A breach of condition the buyer elects to treat as a breach of warranty under Section 13(1), because he prefers to keep the goods and claim compensation.
A breach of condition he is compelled to treat as a breach of warranty under Section 13(2), because he has accepted the goods under a contract that is not severable.

The two routes open to the buyer, the measure of damages, and why the classification still matters

3. Diminution or Extinction of the Price

The buyer may resist a claim for the price to the extent of the loss caused by the breach, instead of paying in full and suing separately.
Extinction means that where the loss equals or exceeds the price, nothing is payable.
It is a defence, not a counterclaim, and is available whether the seller sues for the price or the buyer simply deducts when paying.
Its convenience is practical: the buyer need not fund the whole price and then chase the seller for compensation.

4. The Measure of Damages

The measure again comes from Section 73 of the Contract Act: the loss naturally arising from the breach, or which the parties knew was likely to result. For a breach of warranty of quality, the ordinary measure is the difference between the value the goods would have had if they had answered the warranty and their actual value at the time of delivery. Consequential loss is recoverable within the second limb of Section 73, so a buyer who was known to be buying for resale or for use in manufacture may recover losses flowing from that use.

📖 Mason v. Burningham, [1949] 2 KB 545 (CA)

Facts: A buyer bought a second-hand typewriter and spent money having it overhauled. It then turned out to have been stolen, and she had to give it up to the true owner. She sued the seller for the price and for the cost of the overhaul.

Held: The Court of Appeal allowed both. The seller had broken the undertaking as to title, and the buyer recovered the price and also the cost of the overhaul, which was a natural consequence of the breach, since she had spent it on the faith of having bought the machine.

Ratio: Damages for breach of the seller's undertakings as to title include not only the price but expenditure the buyer reasonably incurred on the goods in consequence of the breach.

5. Further Damage Under Section 59(2)

A buyer who has already reduced the price is not shut out. If his loss turns out to exceed the price, he may sue for the balance. The classic example is a defect that causes damage beyond the value of the goods themselves: contaminated raw material that spoils a manufacturer's whole batch, or a defective component that damages the machine it is fitted to. In Bostock & Co. Ltd. v. Nicholson & Sons Ltd., [1904] 1 KB 725, acid sold for use in brewing was contaminated, and the buyer's claim extended to the loss caused when it spoiled the product, not merely to the value of the acid.

6. Breach of Warranty and Rejection Compared

	Breach of condition	Breach of warranty
Right to reject	Yes, before acceptance	No, under Section 59(1)
Effect on the contract	May be treated as repudiated	The contract stands
Remedies	Reject and claim damages, or elect to treat as a warranty	Reduce the price, or sue for damages, or both under s. 59(2)
After acceptance	Section 13(2) confines the buyer to warranty remedies	Unchanged

7. The Position Stated Shortly

Section 59 applies to a breach of warranty, and to a breach of condition treated as one under Section 13.
The buyer cannot reject the goods for a breach of warranty.
He may set the breach up in diminution or extinction of the price, or sue for damages.
The measure follows Section 73 of the Contract Act; for quality, the difference in value at delivery.
Mason v. Burningham: the buyer recovered the price and the cost of an overhaul.
Section 59(2): reducing the price does not bar a later suit for further damage.
The condition or warranty classification still decides whether the goods may be rejected at all.