Sales of Goods Act- Caveat Emptor

Meaning and Exception to the Doctrine of Caveat Emptor

 The doctrine of Caveat Emptor is important in the context of the buyer, because the buyer must carefully examine the goods that he purchases.

Meaning of the Doctrine of Caveat Emptor [Section 16]:  The term ‘Caveat Emptor’ means ‘let the buyer beware.’ The doctrine of caveat emptor has been given in the first paragraph of Section 16 and runs as follows “Subject to the provisions of this Act and any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale”.

This implies that it is not part of the seller’s duty to show the defects of the goods which he offers for sale, rather it is the duty of the buyer to ensure himself about the quality as well as the suitability of goods.

The buyer must take care of his own purpose while purchasing the goods, i.e., it is his duty to purchase the goods of his requirement. As such, the buyer must take care while purchasing the goods. In case, the buyer makes a wrong choice of the goods, he cannot blame the seller if the goods turn out to be defective or do not serve his purpose. The seller is not supposed to know the particular purpose for which the buyer is purchasing the goods.

Case Law 17: Ward v. Hobbs: Hobbs sold a few pigs to Ward through an auction. The pigs were sold with “all faults and errors of description”, i.e., no warranty was given by the seller in respect of any fault of description. Hobbs bought the pigs. The pigs were ill, and all of them, except one, died. Moreover, they infected the other pigs of the buyer. The Court observed that there was no implied warranty that the pigs were of good health. It was Hobbs’s responsibility to find out about the health of the pigs. Thus, Hobbs could not recover damages from Ward.

Exceptions to the Doctrine of Caveat Emptor:  The doctrine of Caveat Emptor is subject to the following exceptions, as given below.

Misrepresentation by the Seller:  Where the seller makes a misrepresentation and the buyer relies on that representation.

Illustration: Sita bought a house form Sunder who showed Sita the documents of the house. He represented himself as the rightful owner when the house did not actually belong to him. Sita believing the documents made the initial payment for the purchase of the house. In this case, there is a misrepresentation by Sunder and Sita has the right to be refunded the payment that she made to Sunder. She can cancel the Contract.

 Concealment of Latent Defect:  Where the seller deliberately conceals a defect, which could not be discovered on a reasonable examination.

Illustration: Bhavna bought a bottle of glue from a stationery shop. The shopkeeper did not disclose the fact that the glue was defective. When Bhavna used the glue, she discovered that it was defective and could not be used for sticking the stamps. Here Bhavna can return the bottle of glue to the shopkeeper because the defect was not visible

Sale by Description [Section 15]:  “Where the goods are sold by description and the goods supplied by the seller are not as per the description.”

Illustration: Munna bought a Television from an Elctronics dealer. The dealer informed Munna that although the TV was a few years old, it was in an excellent condition. Later, Munna found that the Television set did not work properly. He was entitled to reject the TV and recover his money. This was a contract of sale by description and the dealer had described the TV to be in an excellent condition whereas it was not.

 Sale by Sample [Section 17]:  “Where the goods are sold by sample and the goods supplied by the seller are not as per the sample.”

Illustration: Anu agreed to sell to Bunty asome oil described as foreign refined groundnut oil and a sample of the oil was given to Bunty. When the oil was supplied, Bunty found that the oil was not of the same quality. Bunty rejected the oil supplied by Anu. Here Bunty can reject the oil as the oil had been sold by Sample.

Sale by Sample as well as Description [Section 15]:  “Where the goods are sold by sample as well as description, and the goods supplied are both as per the sample as well as description.”

Illustration: Tina entered into a contract with Shina to supply 50 leather jackets. Tina showed one sample of the jacket made of Sheep leather. Here, the sale was to be both by sample and by description. However, when the 50 jackets were delivered to Shina, Shina rejected them because the leather was not of the quality that had been showed in the sample and the stitching was also improper. Shina has the right to reject the leather jackets supplied by Tina as the jackets had been sold by sample as well as description.

Implied Conditions as to Quality or Fitness [Section 16(1)]:  “Where the seller or the manufacturer is a dealer of the type of goods sold by him and the buyer has disclosed the purpose for which goods are required and relied upon the seller’s skill or judgement, there will be an implied condition that the goods will be fit for the purpose.”

Illustration: In the case Priest v. Last, as has been discussed earlier the purpose of purchasing the hot water bottle was communicated to the seller, and so it was held that the seller was liable. The hot water bottle had been bought for the purpose of using it with hot water, and the purpose had not been served.

Merchantable Quality [Section 16(2)]:  “This means that if the goods are bought for resale then, they must be in a position of being marketed under the description by which they are sold. It also implies that if the buyer buys the goods for use, then their quality must be such that they can be used for the purpose they were bought.” Where the goods are bought by description from a seller, who deals in goods of that description (whether he is the manufacturer, producer or not), there is an implied condition that goods shall be of merchantable quality.

Case Law 18: Jones v. Bowden: A sold certain drugs by auction, to B. In case of sale by auction, it was a trade usage to declare any ‘sea damage’ in the goods. In this case, the goods were sold without such declaration. Subsequently, the goods were found to be sea damaged. It was held that the sale without such declaration meant that the goods were free from any sea damage and thus, B could reject the drugs and claim the refund of the price.

 Relevance of Caveat Emptor:  The doctrine of Caveat Emptor was considered very significant and relevant in historical times, when trade was conducted on a small scale, or the sale was a barter deal, and the buyer had every opportunity to examine the goods before buying. However, in modern times, when the pace of sale and purchase as well as the methods adopted in trade are highly advanced and when laws protecting the consumer have been enacted, the doctrine is of less importance. In addition, consumers are aware of their rights, and thus in fact, the rule of caveat emptor should be replaced by the rule of ‘caveat vendor’ (Let the seller beware).