Exclusion of Implied Terms and Conditions under Section 62 of the Sale of Goods Act, 1930: Exclusion by Agreement, Course of Dealing and Usage, How Such Clauses Are Construed, and the Consumer Protection Limits

Almost everything the Act implies into a contract of sale is a default, not a compulsory term. Section 62 says so: a right, duty or liability arising by implication of law may be negatived or varied by express agreement, by the course of dealing between the parties, or by usage binding on both. That is what allows sales on an as-is basis, limitation clauses, and trade contracts on standard terms. But the freedom is bounded. The courts construe exclusion clauses narrowly and against the party relying on them, and in consumer sales the Consumer Protection Act, 2019 may treat such a clause as an unfair contract term.

1. The Section

Section 62, Sale of Goods Act, 1930

Where any right, duty or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between the parties, or by usage, if the usage is such as to bind both parties to the contract.

Three ways of excluding an implied term, how the courts read such clauses, and the consumer limit

2. The Three Routes

Express agreement. A clause excluding or limiting the implied conditions and warranties, a sale expressed to be with all faults, or a term substituting a manufacturer's guarantee for the statutory conditions.
Course of dealing. Where the parties have dealt with each other regularly on the same terms, those terms may be read into a later contract even if not restated. The dealings must be consistent and sufficiently numerous.
Usage. A usage of trade may vary the implied terms, but only if it is certain, reasonable, well known in the trade, and binds both parties. A usage known to one side only will not do.

3. How the Courts Construe Such Clauses

Contra proferentem. Ambiguity is resolved against the party relying on the clause.
Clear words are needed to exclude a liability the law would otherwise impose, and the more important the obligation, the clearer the words must be.
Express terms are not touched by a clause excluding implied terms.
Incorporation must be proved. The clause must have been part of the contract, whether by signature, notice before the contract, or a course of dealing.

📖 Andrews Brothers (Bournemouth) Ltd. v. Singer & Co. Ltd., [1934] 1 KB 17 (CA)

Facts: Dealers contracted to buy new Singer cars. The contract contained a clause excluding all conditions, warranties and liabilities implied by statute, common law or otherwise. One car delivered had already run a substantial mileage.

Held: The clause did not protect the sellers. The statement that the cars were new was an express term of the contract, not an implied one, and the clause on its terms excluded only implied conditions and warranties. The sellers were liable for delivering a used car.

Ratio: A clause excluding implied terms does not exclude liability for breach of an express term, and exclusion clauses are construed strictly against the party relying on them.

📖 Karsales (Harrow) Ltd. v. Wallis, [1956] 1 WLR 936 (CA)

Facts: A car was inspected and found to be in good order, and was then supplied under a finance agreement containing a clause providing that no condition or warranty as to its condition was given. When delivered, the car was incapable of self-propulsion, with the cylinder head off, valves burnt out and other parts missing or replaced.

Held: The clause gave no protection. What was delivered was not, in substance, what was contracted for. A party who fails to perform the contract at all, or delivers something wholly different, cannot rely on a clause excluding liability for defects in the thing contracted for.

Ratio: An exclusion clause does not protect a seller who delivers something radically different from what the contract described, though modern law treats this as a question of construction rather than a rule of law.

4. The Consumer Protection Limits

Section 2(46) of the Consumer Protection Act, 2019 defines an unfair contract, and the commissions may declare such terms void in a consumer transaction.
Section 2(47) covers unfair trade practices, which may include misleading representations about the quality or standard of goods.
Product liability under Chapter VI gives the consumer a statutory claim against the manufacturer and seller, which a contractual clause between seller and buyer cannot defeat.
The practical position is that Section 62 remains fully effective between businesses of comparable strength, while in consumer sales a clause excluding the implied conditions is exposed to challenge.
Unlike the United Kingdom, India has no general statute controlling unfair contract terms in commercial contracts, so the protection comes from construction and from consumer law rather than from a reasonableness test.

5. The Position Stated Shortly

Section 62 allows implied rights, duties and liabilities to be negatived or varied.
The three routes are express agreement, course of dealing, and a usage binding on both parties.
Exclusion clauses are read contra proferentem and require clear words.
Andrews Bros v. Singer: a clause excluding implied terms did not cover an express description.
Karsales v. Wallis: a clause did not protect a seller who delivered something radically different.
In consumer sales, the Consumer Protection Act, 2019 may treat an exclusion as an unfair contract term.