If you are a consumer who buys something once in a while, you should know about the doctrine of Caveat Emptor! It is a Latin phrase which means “let the buyer beware”. The doctrine of Caveat Emptor reflects an important principle in Law for Sale of Goods. In early 18th century, most of the trades were conducted in open market, where buyer could inspect and check items while purchasing. This made it reasonable to assume that buyer was capable judge the quality and suitability of goods they were purchasing. The practice seemed to be incorporated in Contract Law. It reflects that the buyer has to examine and check the quality and fitness of the goods while purchasing.
Doctrine of Caveat Emptor in India
The doctrine of Caveat Emptor comes under the Law of Contract. In India, the Doctrine of Caveat Emptor has been incorporated under the Sale of Goods Act, 1930. It lays that the buyer has responsibility to thoroughly examine, before he/she purchases the goods. Caveat Emptor states that the seller has no liability if the product purchased by buyer fails to fulfil the particular purpose for which buyer has purchased it.
The Section 16 of the Sale of Goods Act 1930 is the cornerstone of Doctrine of Caveat Emptor. It lays that there is no implied warranty or condition as to the quality or fitness of goods for the contract. It hints towards the buyer’s duty to check the goods at the time of purchase, and seller is not directly liable if the goods are defective and not suitable for buyer. But there are some exceptions to to the rule for buyer on warranty or condition, if the seller makes any fraud or does any unfair trade practices to buyer.
Example of Doctrine of Caveat Emptor
Ramesh purchased a second-hand car from Suresh, and he buys it without checking the condition of engine. After some time, the engine gets serious issue. Since Ramesh purchased the car after conducting a thorough inspection, the doctrine of Caveat Emptor applies here and the seller is not liable.
Exceptions to Caveat Emptor
- Fitness for a particular purpose ( section 16(1))
If the buyers conveys a particular purpose of the goods to seller and there is express or implied condition that goods shall be reasonably fit for the particular purpose, the buyer informed the seller about purpose and buyer relies on seller’s expertise. In this case, the buyer relied on the seller’s expertise, and thus, the seller shall be liable for any loss.
Example- A sells the fertilizer to B for betterment of the crops, but the fertilizers damaged the crops. B relied on A’s expertise, so A shall be liable.
- Merchantable Quality (Section 16(2))
This exception to rule of caveat emptor states that when the goods are sold by description, the dealer is under an obligation to provide the goods of merchantable quality. It implies the guaranty by the seller that the concerned goods are fit for the purpose for which the buyer purchased.
So, if the goods are not of marketable quality, then the buyer will not be the one who is responsible. It will be the seller’s responsibility. However, if the buyer has had a reasonable chance to examine the product, then this exception will not apply.
- Goods purchased under brand name
When the buyer purchased the goods under a trade or brand name, the seller cannot be held responsible for usefulness and quality of product. So, there is no implied condition that the goods will be fit for the purpose the buyer intended.
- Fraud or Misrepresentation by the Seller
This is another important exception under the Doctrine of Caveat Emptor. If the seller commits a fraud while selling the goods to buyer or makes any misrepresentation of goods, then the doctrine of Caveat Emptor will not apply and the seller will be liable for that the buyer’s loss. If the seller sells any material defects of the goods which are later discovered on closer examination, then again the buyer will not be responsible.
- Goods sold by Description
If the buyer purchases goods solely based on their description, an exception to the rule of Caveat Emptor applies. If the goods fail to conform to the given description, the seller will be held accountable for them.
Doctrine of Caveat Emptor – Case Laws
Frost Aylesbury Dairy Co. (1950)
The plaintiff bought milk from a dealer for his family’s consumption. However, the milk was contaminated with typhoid germs, leading to his wife’s catching the infection and eventual death. Since the intended use of the milk was implicitly communicated to the seller, and the product was unfit for human consumption, there was a breach of the implied condition, in which defendant liable. The case reflected upon the general rule of “Goods in their natural state”. It states that even if the goods are in their natural state and not subjected to any manufacturing or processing, the buyer still relies on the seller’s expertise regarding fitness of those goods, and thus, the rule of Caveat Emptor does not apply.
Priest v. Last (1903)
This case deals with the implied condition of fitness under the Sale of Goods Act. The plaintiff purchased a hot water bottle from the defendant, a chemist, without expressly specifying its intended use. However, the bottle burst during use, causing injuries.
The Court of Appeal ruled in Favor of the plaintiff, stating that hot water bottles are bought with a specific use in mind. Since the product failed its obvious purpose, the seller was held liable for damages. The case established the principle that goods must be fit for their intended use, even if the buyer does not explicitly state its purpose.
Conclusion
The doctrine of Caveat Emptor incorporated under the section 16 of Sales of Goods Act 1930 plays a crucial role in emphasizing the buyer’s responsibility while purchasing the goods. A buyer has the duty to examine and inspect the goods during their purchase. Exceptions such as fitness for a particular purpose, merchantable quality, fraud, and misrepresentation ensure that buyers are protected when they rely on the seller’s expertise, or purchase goods based on description.
Landmark cases like Frost v. Aylesbury Dairy Co. (1950) and Priest v. Last (1903) have reinforced the importance of implied conditions in sales contracts, holding the seller accountable for failure to maintain proper standard. While the doctrine of Caveat Emptor remains relevant, the shift towards Caveat Venditor (let the seller beware) reflects the growing emphasis on consumer rights and fair-trade practices.
