Explanation of Article 337
The article clarified that the provisions of warranty against eviction and entitlement are generally not of public order; thus, it is permissible to agree on modifying them, whether in the case of eviction by the seller or by others. The first paragraph clarified the permissibility of agreeing to waive or limit the warranty - that is, to decrease or increase it, except when it arises from the seller's act, or when the seller deliberately concealed it. It is needless to say that the exception pertains to the condition of waiver or reduction, whereas the condition of increase does not apply to these two cases. Accordingly, it is permissible to agree to increase the warranty unconditionally, whether in the eviction issued by the seller or by others, such as the buyer stipulating that he may revert to the seller for the higher of the two values: the price or the value of the sold item at the time of entitlement, or that he may revert to him for luxury expenses in all cases, or that he may revert to him for the warranty upon mere knowledge of the cause of entitlement even if eviction has not actually occurred. As for the agreement to waive or limit the warranty, it is prohibited in two cases: The first case: if it arises from the seller's act; this agreement is void, whether the eviction is issued by the seller himself or by others. If the seller stipulates the waiver of the warranty entirely or that it be limited to a certain amount, this condition has no effect if the seller issues eviction to the buyer, or if eviction is issued by others claiming a right that devolved to them by the seller's act; because if the seller stipulates exemption from the warranty or its reduction and then evicts the buyer or causes others to evict him, his act is considered a gross error that cannot be agreed upon for exemption. The second case: if the seller knows of the entitlement and deliberately conceals it; that is, he knows that the buyer is unaware of the right of others and conceals it from him, this agreement is void because it is fraud. Apart from these two cases, it is permissible to agree to waive the warranty entirely, including any total or partial entitlement, or to agree to reduce it, such as the seller stipulating his non-liability for total or partial entitlement only or for a specific case of entitlement, or stipulating that the warranty amount does not exceed a certain limit and the like. The provision contained in the paragraph is considered an application of what is established in articles (174, 175) of the permissibility of exempting the debtor - who is the seller here - from contractual liability or reducing it in cases other than fraud and gross error, and the permissibility of increasing this liability. The second paragraph clarified that if the seller stipulates the waiver of the warranty entirely, and a fortiori its reduction, and the condition is valid - that is, the entitlement was not by his act and he did not deliberately conceal it - the seller remains responsible for refunding the sale price, so he is obliged in total entitlement to refund the full price and in partial entitlement to refund the equivalent part of the price for the entitled portion; the condition only benefits him by exempting him from compensation for other damages, except if the buyer knew at the time of sale the cause of entitlement, such as knowing of a dispute over the ownership of the property, and bought it with the condition of not reverting to the seller for the warranty; he accepted the condition with full knowledge. It is clear from the text of the paragraph that the ruling of this issue is of public order, so it is not permissible to agree otherwise; such as the seller stipulating his exemption from reverting to him even for the sale price in the event of entitlement, and it turns out that the sold item is entitled to others and the buyer was unaware of the cause of that entitlement, he has the right to revert for the price without other compensations despite this condition. It is worth noting in the application of the provisions of this article two matters: First: if there is doubt in interpreting the condition, it is interpreted in favor of the one who bears its burden in application of article (104); in the case of stipulating an increase in the warranty, the doubt is interpreted in favor of the seller, and in the case of exemption or reduction, it is interpreted in favor of the buyer. Second, the agreement mentioned above can be explicit or implicit, such as the contracting parties being aware of the right of others at the time of contracting and taking that into account in the price, and the circumstances of the contract may indicate, even with knowledge of the cause of entitlement, that there is no agreement, so the seller's obligation to the warranty remains as it is.
Related To
Article 337
-
An agreement may be made to relieve the seller from warranty of title or to limit or extend such warranty, except in cases where such liability arises from an act made by the seller or concealed thereby.
-
An agreement to relieve the seller from warranty of title shall not preclude the buyer’s right of recourse against the seller for the amount paid, unless it is established that the buyer was aware of the grounds for ownership at the time of the sale.