Doctrine of Caveat Emptor
Caveat emptor a Latin word “let the buyer beware”. It is a principle of contract law in which onus is on buyer. The buyer has to perform due diligence before making a purchase. The term used in real property transactions, but applies to other goods, as well as some services. The “caveat emptor,” which means the buyer of goods or services expected to be alert and cannot recover damages for an inferior product. Buyer in a contract of sale, will purchase it on his own risk . Except in case of fraud or condition in the contract itself.
Buyer cannot blame or sue the seller for defective goods or service if buyer was careless at the time of purchase. It is buyer’s responsibility to check the goods at the time of purchase. Buyer purchases goods if he satisfied that goods are according to his requirement. The buyer has to bear the consequences of his wrong selection of goods.
“Caveat venditor” puts the burden on the seller to check the goods and services. The onus is on seller to check the goods and services. to Seller has to meet all legal requirements related to the transaction. Failure to do so can make a contract unenforceable.
“Caveat lector” warns the reader to beware of content written. “Caveat auditor” warns the listener to beware of what he may hear.
There was a sale by a woolen manufacturer of cloth to merchant, who was also a tailor. The cloth required for making liveries.Seller was unaware of the fact. Liveries could not be made,due to defect in the cloth. But there was nothing to show that it was unfit for other purposes. Buyer was liable for non-communication.
Exceptions to the Doctrine of Caveat Emptor
The following are some of the exemptions to doctrine of Caveat Emptor:
1. Sale by Description:
When the buyer purchases the goods or service assumes that goods are of merchantable quality. Section 15 of the Sales of Goods Act, 1930, sale by description is contract for the sale of goods, it is implied condition that the goods shall correspond with the description. If the sale is by sample as well as by description, it is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond with the description.
2. Purchase by Samples and Description:
If the buyer buys goods with sample and description and it does not match the description then buyer can reject the goods. Its expected goods match the sample and description.
3. Fitness for Purpose:
When the seller knows the demands or requirement of buyer and the buyer trust seller for quality of goods , there its assumed that goods purchased are of required quality.
4. Consent by Fraud:
The doctrine of Caveat Emptor apply to the contract by fraud. Seller obtain consent of buyer by fraud. A seller, who is guilty of fraud, shall have no protection of the doctrine of caveat emptor. Where the seller makes a false representation intentionally and the buyer relies on it or where the seller knowingly hides the defects in the good, the doctrine of caveat emptor does not apply as the buyer did not give his consent freely.
In Smith Vs Green, a contract of sale between A and B according to which A has to sell an animal to B out of his (A`s) farm. B selects an animal and request’s A to confirm that there is no any sickness to that animal. Actually the animal has been suffering from some sickness and A conceals the fact. There after it comes across death and court decides that B can get the amount back.
5.Usage of Trade:
Proof of reasonable usage or custom of trade may also establish an implied condition with regard to quality or fitness of goods for a particular purpose
Where the seller has made a false representation relating to the goods and the buyer has relied upon it, the doctrine of Caveat Emptor will not apply. Such a contract being voidable at the option of the innocent party, the buyer has a right to rescind the contract.
7. Trade Name:
If buyer buys a product of particular brand the it assumed that the product is of good quality and standard . The exception of ‘trade name’ is a proviso to Section 16(1). Since the buyer buys the good specifying the trade name, the seller’s only undertaking is that the good shall be of the same trade name as demanded by the buyer.
Applicability Under Different Acts
The Doctrine of caveat Emptor is applicable in following Acts:
- The Sale Of Goods Act, 1930
- The Indian Contract Act, 1872
- The Consumer Protection Act, 1986