Under Section 14(c) of the Sale of Goods Act, 1930, what

Solution

Section 14(c) provides an implied warranty: "that the goods are free from any charge or encumbrance in favour of any third party, not declared or known to the buyer beforehand or at the time of the contract, and that the buyer shall have and enjoy quiet possession of the goods." If goods are subject to an undisclosed lien, mortgage, or pledge in favour of a third party, the warranty is breached. For example, if A sells goods to B, but the goods are pledged to C as security for A's debt without B's knowledge, C can recover the goods from B, and B can sue A for breach of warranty. However, if the buyer knew of or agreed to accept the encumbrance, the warranty is not breached. The key phrase is "not declared or known to the buyer," making this a warranty of full disclosure.