Directions: The following question consists of legal proposition/principle (hereinafter referred to as ‘principle’) and facts. This principle has to be applied to the given facts to arrive at the most reasonable conclusion. Such principle may or may not be true in the real sense, yet you have to conclusively assume it to be true for the purpose of the question. In other words, in answering the question, you must not rely on any principle, except the principle that is given herein below for the given question. Further, you must not assume any facts other than the facts stated in the question. The objective of this question is to test your interest towards study of law, research aptitude and problem solving ability even if the ‘most reasonable conclusion’ arrived at may be unacceptable for any other reason. It is not the object of this question to test your knowledge of law.

Principles: (1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty. (2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. (3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated. Facts: A contract might specify that ABC Co. will sell to XYZ Corp. 500 umbrellas for 50,000 on the stipulation that the umbrellas are inspected by XYZ Corp. for defects and their quality approved by that company.

Does the stipulation amount to condition or warranty?