Doctrine of Caveat Emptor

By Meenakshi Mishra, 2nd year B.A. LLB., Allahabad University

‘‘Caveat Emptor, quio ignorare non debuit quod jus emit’’

(let a purchaser beware , for he ought not to be ignorant of the property which he is buying from another part.)

Caveat Emptor – derived from word ‘caveat’ (i.e. may he beware) + ‘emptor’ (i.e. buyer). It is a Latin term which means ‘‘let the buyer beware’’.  According to this rule, the buyer himself should be careful while purchasing the goods and he should himself ascertain those goods suit his purpose. For example, A purchases a horse from B. A needs the horse for riding but is suitable only for being driven in a carriage. A can neither reject the horse nor can he claim any compensation from B.

The philosophy behind this rule basically was that the buyer should be aware of his rights.  There are  many legislations for the protection of rights of buyer or consumer. If any wrong committed against the rights of the consumer or buyer, remedy is provided for that, for eg. , Consumer  Protection Act . So it deals with:   –
 1.Buyer shall apply his own skill and judgement before buying                                      

 2. Buyer should be aware of his rights

Section 16 of the Sales of Goods Act, 1930 deals with the rule of caveat emptor.

Exception to the rule of caveat emptor

For the protection of buyer’s interest from the globalization of trade and commerce some restricts were carved out which are as follows:

1.     Implied condition as to quality or fitness

Sec. 16(1) provides certain requirements, which when satisfied, is considered to be an implied condition from the side of the seller that the goods supplied shall be reasonably fit for the purpose for which the buyer wants them.

Buyer must expressly or impliedly makes known to the seller the purpose of his purchase.

Thus, if the case of Andrew  Yule and Co., the buyer had informed the seller that he needed the hessian cloth for packing purpose, he could reject the cloth if he found that the same was unsuitable for that purpose.

  • Buyer shall be dependent on seller’s skill or judgement.
  • The goods are of a description which the seller supplies in his official course of business.

In Raghava Menon v. kullappan Nair, it was observed that  ‘‘the plaintiff is a layman and he approaches a fairly reputed firm like the defendant dealing in watches and purchases a watch from them, not for any special purpose , but for the common purpose of knowing the correct time. In such a case, sec.16(1) of Sales of Goods Act must apply , by implication, the purpose for which he purchases the watch and also relies on the seller’s skill or judgement.’’

Proviso to Sec.16 (1) –  provides that  when the sale is for specified goods under the patent or trademark of such goods, the concept of implied condition as to the fitness does not exist.

The proviso deals with the cases where the buyer relies on the trade name of the product and not on the skill of the seller.

2.     Implied condition of Merchantable quality [Sec.16(2)]

The term ‘merchantable’ quality has not been defined in the Act. But, the term ‘merchantable’ means the goods must be capable of passing in the market in the name or description by which they are sold. Where-

  • The goods are brought by description;
  • From a seller who deals in the goods of that description.

There is an implied condition that the goods shall be of merchantable quality.

In  Grants v. Australian Knitting  Mills ltd., the underwear contained certain chemicals which could cause skin disease to a person wearing them next to skin, it was held that because of such a defect, the underwear were not of merchantable quality.

Proviso to Sec. 16(2)- According to this, where the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed .So the proviso divides the defect into two kinds, patent and latent.

The defects which be found on examination by a person of ordinary prudence with exercise of due care and attention are called ‘patent defect’ and the defects which are hidden are called ‘latent defects’

Implied condition is negatived on examination if the defects,  the implied condition of merchantability continues in spite of the examination of the goods.

3.     Usage of trade – [Sec.16(3)]

This section gives a statutory force to the condition implied by the usage of a particular trade . It says that when a seller is aware of the usage of trade. It says that when a seller is aware of the usage of trade i.e. purpose for which goods will be used, then there is an implied condition that seller must warrant the quality or fitness of the goods.

4.     Express terms-[Sec.16(4)]

The parties in a contract of sale can agree to any express conditions or warranties as to the liabilities for the defect in the goods. But such warranty or condition implied by law unless such express terms are inconsistent with the implied conditions.

5.     Fraud or misrepresentation

If the seller in a contract, obtains the consent of a buyer by fraud or misrepresentation, then, the seller will be held liable.

6.     Sale by description and sample

In this case, the responsibility will be on the seller if the goods do not resemble such sample and/or description.

Cases related to Caveat Emptor

In  M/s  Emami  lmt.  v. Nikhil Jain , a consumer court has imposed a penalty of  15 lakh rupees on Emami  lmt. for ‘misrepresentating’ to the public about its fairness cream for men. The company’s advertisements claim the cream makes skin fairer. The district  consumer disputes redressal  forum (central),Delhi, held that Emami had adopted unfair trade practices by claiming through its advertisements that its product ‘Fair and Handsome cream’ would give men fairer skin in three weeks.

 In Benjamin Careathers v. Red Bull North America ,Inc., court ordered that Red Bull will pay $10 customers disappointed, the drink did not actually give them  ‘wings’ .The lawsuit accusing it of false advertising its energy drinks as providing functional benefits above and beyond what might be obtained from ‘a sample cup of a coffee or a caffeine pill’.

In  Wallis v. Russel, the court while explaining the scope of the doctrine said that Caveat Emptor only implies  that a buyer must take care . It does not mean that a buyer shall take a chance. The doctrine applies where a buyer exercises his own judgement and voluntarily chooses the product he needs to buy.

Position of ‘caveat emptor’ in modern era

Caveat emptor have come a long path from its origin. Caveat emptor which means ‘let the buyer beware’ was given by common law way back but  this concept was overridden by the phrase ‘caveat venditor ’. The phrase ‘caveat emptor’ is no longer used by jurist now-a-days because it does not lays a duty on the seller if the product is damaged, defective or against expectation of the buyer. It puts all the duty on the buyer to be aware, use his skill and knowledge and also should be aware of the remedies available to him.

Conclusion

In the age of globalization, most of the  articles are packed and sealed by the producer but still the buyer can examine the packed goods by its description shown on the cover, expire date, logo, etc. So the modern trend to protect consumer rights has minimized the importance of rule of ‘caveat emptor’. The change is taking place in order to create a more consumer – oriented market wherein transactions of commercial nature will be encouraged. Such change will held a more consumer – friendly market and an appropriate balance between rights and obligation of buyer and seller .

Reference

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