Author: Busam Pushyami
The phrase caveat emptor is adopted from Latin which can be translated as “let the buyer beware”. Caveat means “Caution” and Emptor means “Buyer”. This term is adopted from the legal maxim “qui ignorare non debuitquod jus alienum emit”. It means Let purchaser beware; who ought not to be ignorant that he is purchasing the rights of another. In Indian law, it was mentioned in Section 16 of the Sale of Goods Act, 1930.
Maxim says the consumer must check the quality of the product that he wants to buy and he himself is the warranty of the product which means there is no particular warranty provided by the seller regarding goods. He is responsible for the condition and protection of the product which he buys depending on his own skill and judgment. The principle is when a person examines a product and satisfies to buy it he doesn’t have further right to return the product or complain about the product and is not entitles to remedies for any damages. He is responsible and bound to his decision. In such situations, there is no obligation on part of the seller to reveal the product’s information.
This principle applies to all goods and services if the seller doesn’t give any warranty but the buyer buys that product. Since the seller, does not provide any warranty he is not responsible for the actions of the buyer and his judgment in buying that product.
With the increase in easy access to new technology and the need to increase economy, this principle is used in world market transactions. This principle also applies to real estate transactions the major purchases and selling are done on daily basis. This principle is applied in the financial Services Industry.
However, if the buyer buys any product depending on the product’s description as provided by the buyer, then this principle does not apply and the seller is bound to the description that he provided about the product and does not apply when the seller gives false information concerning the product.
Modern law protects the buyer by implementing various exceptions to the principle “Caveat Emptor”. For example, if the buyer tells the seller the purpose of his purchase and asks the seller to suggest the best quality good, the seller to the best of his knowledge should suggest a product to the buyer. When the buyer satisfies then he will purchase the goods. But, if the description given by the seller does not fit with the real quality and condition of the goods purchased then the buyer can ask the seller for the exchange of goods or the damages incurred by the buyer due to the wrong description of the seller. This is when the doctrine of Caveat emptor changes to Doctrine of Caveat venditor which means “Let the Seller Beware”.
Example: When a buyer asks a person and seller shows him the old houses, but if buyer wants to use the house for the purpose of advertising his products in that room, the seller is not responsible for the quality of the product. The buyer did not inform the seller about the purpose of buying the goods and asked for the seller’s opinion. Thus, the doctrine of Caveat Emptor will apply.
Buyer can shift the responsibility to seller if
a. He explains the purpose for the purchase
b. Buyer relies on skill and knowledge of the seller
c. If the seller sells such goods.
Recently governments are also emphasizing the principle of Caveat Venditor to protect consumer’s interests. It is mentioned that buyer who purchases the goods has every right to know the condition and standard of the product he purchases.
Section 16 of the Sale of Goods Act also gave certain exceptions. The Doctrine of Caveat Emptor applies as Caveat venditor if the nature of the transaction falls within these exceptions.
Section 16(1): Quality of the goods that fits the purpose.
If the buyer explains the purpose for the purchase of the goods and asks the seller to prescribe the best-fit goods for the purpose depending on the seller’s skill and judgment, then the seller in the ordinary course of business relying on his knowledge about the products that he is selling should prescribe goods for the buyer. If the seller misrepresents the facts or condition of the product then he is bound by his words and cannot escape from responsibility.
Shital Kumar Saini v. Satvir Singh, in this case,there is a purchase of compressor with a 1-year warranty, but later it was realized that validity is only for 3 months. It is held in this case that section 16(1) requires that goods should fit the purpose of the buyer.
Section 16(2): Goods should have merchantable quality
Merchantable quality means that if goods are sold again in the market, it should have same qualities, condition and should fir for the purpose for which it is bought.
Section 16(3): usage of trade
When the seller knows the trade for which the purchased goods are used, then the seller must give a warranty for the quality of products. The seller must reveal if there are any defects in the product.
Section 16(4): an express warranty or condition is consistent with the conditions of this act then it does not invalidate a warranty.
Sale by misrepresentation or fraud: If the seller misrepresents the facts of the goods purchased or through any fraudulent means makes the buyer buy the gods, then if any defect is found, the seller will be responsible.
Sale by sample or description: if the seller provides any sample of the product then the product quality and condition that was bought should be the same as the sample.
Phulchand Ram Marwari and Anr. V. Naurangi Lal Marwari, it was held in this case that when a person purchases according to Caveat Emptor at his own risk then he is liable for himself in case of loss.
Ward v Hobbes, it was held that the seller cannot disguise the true identity of the product by means of fraud or misrepresentation.
Frost v Aylesbury Dairy Co. Ltd, facts of the case include a person who bought milk without knowledge that it containing typhoid germs causing sick to his wife. Thus, he was held entitled to damages.
Sale of Goods Act, 1930