Definition of Doctrine of Caveat Emptor
The Latin phrase ‘Caveat Emptor’ means let the buyer beware. The doctrine of Caveat Emptor under the Sale of Goods Act talks about the onus of the buyer in ascertaining the risks in a contract. However, this does not free the seller completely from any responsibility. Let’s understand in detail the Doctrine of Caveat Emptor and its exceptions.
The Doctrine of Caveat Emptor Meaning
The Doctrine of Caveat Emptor means that the responsibility lies on the buyer of goods and he must perform due diligence before the purchase of the goods. It is expected from the buyer to be alert in a contract of sale. He cannot hold the seller responsible for inferior goods unless the contact is based on fraud. The Doctrine of Caveat Emptor is generally applicable in the case of property transactions but it can also be applied in the sale of goods and other services.
Section 16 of the Sale of Goods Act, defines it as ‘“there is no implied warranty or condition as to the quality or the fitness for any particular purpose of goods supplied under such a contract of sale“
Let’s explain the Doctrine of Caveat Emptor with an example. The seller makes the goods available in the market and it is the responsibility of the buyer to inspect them well before buying. If the buyer later discovers a defect in the goods that could have been detected earlier by him, he cannot sue the seller for inferior quality.
Though the responsibility lies with the buyer, he can shift it to the seller under the given conditions:
If the buyer has informed the seller about the purpose of the purchase, before making the purchase.
If the buyer relies on the technical expertise and experience of the seller.
If the goods are of a description that the seller supplies in his normal course of business.
Exceptions to the Doctrine of Caveat Emptor
The Doctrine of Caveat Emptor and its exceptions will help us understand the situations in which the responsibility is not put only on the buyer.
Fitness of the Product for the Buyer’s Purpose of Purchase- Section 16 (1)
If the buyer informs the seller about his purpose behind purchasing the goods and the seller does not sell the goods according to that knowingly, it relieves the buyer from the responsibility. In this case, it becomes the duty of the seller to supply the right goods to the buyer. For example, A informs B, who is a shoe seller, that he wishes to purchase shoes for running. If B still sells him shoes that are not for running, then B can be held responsible.
Sale of Goods Under the Trade Name
If the buyer purchases a branded product or a product sold under a trading name, then he is assured of the quality that is associated with that brand name. The seller in this case cannot be held responsible. In this case, the buyer is not relying on the skill or judgment of the seller but on the implied quality standard that the brand offers.
Goods Sold by Description
If the buyer purchases the goods based on their description which matches the product, then the seller cannot be held liable. The seller will be held liable only if he provides an incorrect description of the goods.
Merchantable Quality of Goods- Section 16(2)
The seller must provide goods of merchantable quality to the buyer. This means that the goods must be fit for resale in the market and must pass the market standards. When the buyer purchases the goods from a seller based on a description and the seller deals in the goods of that description, then the goods must be of merchantable quality. If the goods are not of merchantable quality, then the seller can be held liable for the same.
Sale by Sample Inspection
The Doctrine of Caveat Emptor does not apply if the buyer purchases the goods after careful inspection of a sample of the goods that he intends to buy and the seller supplies goods different from that sample. For example, A inspects a sample carpet manufactured by B. He gives an order of 100 carpets of the same quality as that of the sample. If B supplies carpets that do not match the sample carpet in quality, then he will be held liable. If the sale is made based on a description as well as a sample and the goods do not match both, then the buyer is not held responsible.
Trade Usage - Section 16(3)
The rule of Caveat Emptor does not apply if the seller deviates from informing the buyer about the quality or the fitness of goods/products. There is an implied condition or warranty on the condition of the goods.
Fraudulent Representation by the Seller
If the seller provides fraudulent information about the goods or conceals some important information about them, the buyer is not responsible.
FAQs on The Doctrine of Caveat Emptor
1. What is the history of the doctrine of caveat emptor?
Maxim Caveat emptor refers to 'let the buyer beware. This helps in understanding the laws related to buyers. It was implemented in the 19th century. This doctrine explains the right a buyer has. Acc. to the Doctrine of Caveat Emptor, a buyer has the right to examine and judge the product before actually buying it. This law made sure that the products must be suitable for the needs of the buyer before he buys them. In 1893, the English Sale of Goods Act was also passed.
2. Give an example of caveat emptor.
Consider two people John and Adam. If John wants to buy a house from Adam, he has the right to ask Adam about the specifications and defects of that house. Adam also tells the damages and defects in that house. He told John about the leakage issues and other problems. John bought the house but did not inspect the bathroom of the house. After a while, there was a lot of leakage in the bathroom. A few days later, the floor of the house shattered and the house got muddy. Moreover, the dining room's ceiling started to drop down in pieces. John decided to leave the house and reach court about this issue. But, due to the doctrine of the caveat emptor principle, John is empowered to demand this desired money. This caused heavy loss to john as the seller did not give his money back. Therefore, the principle of caveat emptor proved to be unfair in this case. Similarly, this case had chances of other frauds which made it unsuitable for daily life application and the market process.
3. How did the doctrine of caveat emptor change to the doctrine of caveat venditor?
In the case of Priest v. Last, the rule of caveat emptor suffered very much. Here, the reliance was placed on buyers (as the buyer relies on the seller's skills and judgment). Also, the buyer was empowered to reject the good if the quality is not up to the expectations. For example - if the buyer purchases a hot water bottle because of the seller's skills and claims. In this case, the buyer has the right to reject the product if the product has any false claims or defects. This law was the first to give importance to the buyer along with the seller's judgment and skills. After a while, this rule gained popularity. Then, further, this law was implemented as the doctrine and proved out to be very efficient for the buying and selling of goods. It made a good two-way communication between the buyer and seller. Also, the doctrine of Caveat venditor was the first law to give buyers the proper rights to express their views and demands while buying something from the seller. This law also increased the responsibility of the seller and resulted in the production and selling of good quality products on a major level. Therefore, people adopted the doctrine of Caveat Venditor.
4. Write a short note describing the points about the requirement of section 16(2) in the doctrine of caveat emptor.
Requirement of Section 16(2)-
The particular purpose should be explained by the buyer (for which he/she is buying that product).
The buyer should trust and rely on the seller and his claims/skills related to the product he is selling. Also, the buyer was given the right to judge the product as per the skills of the seller.
The goods and items must belong to the described category that the seller supplies in his daily business.
The buyer should choose the goods wisely and consider his choice to be the final and valuable one.
5. What is the doctrine of caveat venditor?
The doctrine of caveat venditor is the legal law that originated in the Latin country. The meaning of 'Caveat' means 'beware' and 'venditor' means 'seller'. This doctrine focuses on making the seller beware. In this law, the person who sells the goods is responsible for providing valid and original details about the product to the buyer. This law is the opposite of the doctrine of Caveat Emptor. This makes the seller responsible for the quality of the product and the seller must make sure about the fair quality of the product.
Acc. to the doctrine of Caveat Venditor :
The buyer was considered as the king of the market and was empowered with sufficient rights to buy good quality products by their choice.
This law also reduced the responsibility of the buyer and made the buying-selling process more systematic.
6. What is the difference between ‘caveat emptor’ and ‘caveat venditor’?
The Doctrine of Caveat Emptor means that the responsibility is on the buyer while Caveat Venditor places the responsibility on the seller. The burden to check the goods and services in the latter is on the seller. He must ensure that the goods meet all legal requirements related to the transaction. Any failure to do so on his part makes the contract void. In conclusion, we can say that the doctrine of ‘Caveat Venditor’ is the opposite of the doctrine of Caveat Emptor.
7. A Who is an art critic buys a painting of a renowned painter from an art gallery. later when it is discovered that the painting is a fake, can a reject the painting?
In the Doctrine of Caveat Emptor example, even though the buyer had the expertise to judge the painting and he had inspected it before the purchase, the seller was bound to inform the buyer about the painting not being an original work. The responsibility, in this case, is on the seller.