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The Rule of Caveat Emptor: Meaning and Exception

The Sale of Goods Act, 1930 gives us the explicit use of the term Caveat Emptor. The literal translation of it would be let the buyer beware.

In simple words, what this rule states that in an open market, where the seller has all the right to list his goods for sale, the buyer must take adequate precaution before buying. The buyer must ascertain whether the item that he is taking a look at is of standard quality or not.

If after having the chance to take a proper look at the product, he still goes ahead and buys the product and later the product turns out to be defective or of inferior quality, or for that matter doesn't match the standards which the buyer expected, then the seller can't be made liable as the buyer to chose to purchase what he did.

The fundamental idea behind the rule of Caveat Emptor is that once a person has made himself satisfied with a particular product that he purchased; he should not have the right to go ahead and reject them later. One of its main objectives is also to make the buyer more aware. When a person knows that he would not get relief later if the goods turn out to be defective then it increases his awareness and he chooses to be extra cautious while purchasing. That in turn reduces the amount of litigation in the courts.

The rule of Caveat Emptor is seen under Sec 16 of the Sale of Goods Act, 1930. It states

"Subject to the provisions of this act or any other law for the time being in force there is no implied warranty or condition as to quality or fitness for any particular purpose of goods supplied under a contract of sale"

Scope of Caveat Emptor

In the leading case of Ward v Hobbes the House of Lords held that a vendor cannot be expected to use artifice or disguise to conceal the defects in the product sold, since that would amount to fraud on the vendee; yet the doctrine of caveat emptor does not impose duty on vendor to disclose each and every defect in the product. The caveat emptor imposes such obligation on vendee to use care and skill while purchasing such product.

Exceptions to the rule of Caveat Emptor:

  1. Sec 16(1) talks about a situation where the buyer has either expressly or impliedly told the seller that he relies on his skills and judgements for a good that the seller deals in his ordinary course of business, then there is an implied condition that the goods shall reasonably be in accordance with the said purpose.

    The following essentials has to be fulfilled for this. Firstly, the buyer must make the seller aware for the purpose for which he is asking for the good. The buyer must rely on the seller's judgement and skill. Lastly, the goods must be of the description that the seller deals in.

    In the leading case of Shital Kumar Saini v Satvir Singh the plaintiff had purchased a compressor on one-year warranty. It showed defect in 3 months. It was replaced by another but no warranty was provided on this. The court allowed it to be rejected on the ground that the goods should have been reasonably fir for the purpose for which they are sold.
     
  2. Sec 16(2) talks about merchantable quality which is one more exception. It talks about the fact that the seller who sells goods by description has a duty to ensure that those goods are of proper merchantable quality i.e. if they are resold then they should be in a position to be passed of under the same market description. This however is subject to the condition that the buyer did not have reasonable opportunity to examine the goods. If he did then this would not apply.
     
  3. Sec 16(3) provides for an exception where the conditions are implied by the usage of this particular trade. So, in a case there is an implied warranty with regards to the fitness and quality of the goods and seller doesn't abide by that then in that case, the seller would be liable.
     
  4. In a case, where an order has been in bulk and the buyer checks only a small sample and then if the bulk doesn't coincide with the sample then the buyer won't be held responsible. For example- if one person orders a particular type of a notebook in a huge quantity and checks only one, and the others come out to be different then this doctrine won't be applicable.
     
  5. The final exception to this rule applies to the scenario when the seller has obtained the consent of the buyer by fraud or misrepresentation then this doctrine would not apply. Moreover, if the seller willingly conceals any material defects which the buyer later comes to know about then also the buyer won't be liable.
     
Hence, we see what this doctrine of Caveat Emptor means. It aims at creating an awareness among the buyers to be careful in choosing what they buy. At the same time, it tells the sellers that if they cheat by any means then they would face the repercussions. For this, The Consumer Protection Act 2019 is firmly in place.

Written By: Mr. Saikat Mukherjee, A 3rd year BA LLB student at Symbiosis Law School, Nagpur.
Email: [email protected]

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