Michael sold his car in good condition to Nelson. However, there were unpaid cla
ID: 428676 • Letter: M
Question
Michael sold his car in good condition to Nelson. However, there were unpaid claims on the vehicle that were still not settled when the sale was made. Nelson was unaware of the unsettled payments due on the vehicle, and Michael did not explicitly state them to Nelson at the time of sale. Michael wanted to settle the claims before the vehicle was delivered to Nelson in a week’s time, and he did manage to settle them all. Which of the following is illustrated from this scenario?
There is a breach of warranty against encumbrances in this instance because the automobile sold to the buyer is already subject to an outstanding claim that had been placed against it by the original owner and which was unknown to the buyer at the time of sale.
This is a case of breach of warranty of conformity to description. Since Michael did not inform Nelson of the outstanding settlement on the vehicle, there was inadequate description of the vehicle made prior to the sale.
The warranty of fitness for a particular purpose applies to this scenario. Nelson buys the vehicle for a particular purpose, and the unsettled payments could render the vehicle unusable for the purpose.
Warranty against encumbrances applies to the vehicle only at the time it is delivered to the buyer. It is not concerned with an encumbrance that existed before or at the time the sale was made.
Explanation / Answer
The following is illustrated by this scenario:
There was a breach of warranty against encumbrances in this instance because the automobile sold to the buyer is already subject to an outstanding claim that had been placed against it by the original owner and which was unknown to the buyer at the time of sale. Warranty against encumbrances is, when every seller by the act of selling makes a warranty that there is no lien on the good which he/she buying. The good which is delivered is free from any kind of lien at the time of purchase and the buyer has no knowledge about it. Nelson was not aware about the outstanding claims on the vehicle.