13 February, 2016

Doctrine of Caveat Emptor

Caveat emptor is a combination of two Latin words. Caveat means  caution or warning or beware; and Emptor means the buyer, the purchaser. Caveat emptor means: Let the purchaser beware. It is a disclaimer of liability for buyer’s disappointment. It is one of the settled maxims, applying to a purchaser who is bound by actual as well as constructive knowledge of any defect in the thing purchased, which is obvious or which might have been known by proper diligence. The intent of the rule is to place a duty of care on the buyer in selecting an item and putting forth appropriate inquiry before completing the sale. In this way, a seller is also protected from liability for buyer's remorse.

A seller is under no duty to reveal unflattered truths about the goods sold and therefore, whenever the buyer buys goods, he must exercise necessary care in his own interest. A buyer, in contract of sale of specific goods, purchases the goods at his own risk as regard as the quality, price of the goods except on the case of fraud or when any condition to that effect is laid down in the contract. A buyer cannot hold the seller responsible and liable if the goods turn out to be defective or do not prove to be useful for the purpose for which they are purchased or if the buyer makes any mistake in assessing the quality of goods purchased. Thus it is for the buyer to ensure himself only at the time only at the time of purchase that goods confirm his own requirements. 

In one case, A sent some pigs to market to be sold by auction. B purchased the goods with all its faults and errors of description. A knew that pigs were suffering from fever but he did not disclose the same to B. it was held in the case that there was no implied warranty by A and the sale was good and A was not liable for any damages.
Caveat emptor does not mean either in law or in Latin that the buyer must take chances, it means that the buyer must take care. 

In the good olden days the principle of ‘Caveat emptor’, which meant buyer beware governed the relationship between seller and the buyer. In the era of open markets buyer and seller came face to face, seller exhibited his goods, and buyer thoroughly examined them and then purchased them. It was assumed that he would use all care and skill while entering into transaction. The maxim relieved the seller of the obligation to make disclosure about the quality of the product. In addition, the personal relation between the buyer and the seller was one of the major factors in their relations. 

According to this rule, the buyer himself should be careful while purchasing the goods suit his purpose. If the goods are subsequently found to be unsuitable for the purpose, he cannot blame the seller for the same. The buyer ordered for hessian cloth without specifying the purpose for which he wanted the same. It was in fact needed for packing. Because of unnatural smell, it was unsuitable for that purpose. It was held that buyer had no right to reject the same, even if it did not serve his purpose.

There are certain exceptions to this rule of caveat emptor. They are:-
PURCHASE BY DESCRIPTION:-The rule of caveat emptor does not apply in a case where goods are bought by description from a seller. In such a situation there is an implied condition that the goods shall correspond with the description. It is a condition which goes to the root of the contract, and the breach of it entitles the buyers to reject the goods.

 PURCHASE BY SAMPLES AND DESCRIPTION :- Where goods are bought by sample as well as by description and the bulk of goods do not correspond with the sample or with the description, the buyer is entitled to reject the goods. The rule of caveat emptor shall not apply in such a case.

FITNESS FOR PURPOSE :- Where the buyer informs the seller the particular purpose for which the goods are required and relies upon the seller’s skill or judgment there is in that case, an implied condition that the goods shall be reasonably fit for the purposes for which they are required.

TRADE NAME :- In the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose.

MERCHANTABLE QUALITY:- Where the goods are bought by description from a seller who deals in goods of that description whatever he is manufacturer or producers or not, there is an implied condition that the goods shall be of merchantable quality.

USAGE OF TRADE:- Where the usage or trade annexes an implied condition or warranty as to quality or fitness for a particular purpose and seller deviates from that, then this rule (of caveat emptor) does not apply.

SALE BY SAMPLE :- In a sale of goods by sample, the rule of caveat emptor does not apply if the bulk does not correspond with the sample or if the buyer is not given an opportunity to compare bulk with the sample.

CONSENT BY FRAUD :- Where the seller makes a false statement intentionally to
the buyer and the buyer relies on it or where the seller knowingly conceals the defects in the good, the doctrine of caveat emptor does not apply.

In every contract of sale there is an implied condition that the seller has a right to sell the goods and in an agreement to sell he has a right to sell the goods at the time when the property is to pass. The transfer of title to the goods can only be made either by the owner or an agent.

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