Caveat Emptor: Its Exceptions and Changing Dimensions
Keywords:- Caveat Emptor, buyer, seller, vendor, awareness, risk, product
Author:- Vedangee Borikar
INTRODUCTION
Caveat Emptor, a Latin phrase meaning let the buyer beware,” is a rule in commercial law that states that the buyer buys at his own risk without express assurance in the contract. The phrase was suited to purchases and sales going on in the open commercial centre or among close neighbours, according to an early custom-based law proverb. Roof E. Jeffery said That the increasing volatility of modern trade has caught the buyer off guard. He’s forced to rely more and more on the dealer’s and maker’s ability, judgement, and honesty. The most recent commercial law recognizes this and protects the buyer by offering various exceptions to the criterion of admonition emptor.
As a result of a deal by test, the law infers a requirement in the understanding that the buyer will have a reasonable opportunity to inspect the majority of the stock and that the majority of the stock will match the quality sample. The customer assumes the risk that the product may be flawed or unfit for their purposes when a sale is subject to this warning.
Simply said, it does away with the requirement that a client examines, evaluates, and tests an item before buying it. In any case, the most recent change in consumer protection legislation has lessened the importance of this run programme. The dealer has been assigned new duties, and the idea of caveat emptor for “let the merchant be watchful”—has become more common. Although the consumer is still expected to conduct a reasonable appraisal of things before purchase. A dealer is legally obligated to provide certain assurances unless the buyer and the merchant agree differently.
Understanding the meaning of caveat emptor
Meaning of Caveat Emptor: The Latin word caveat emptor means “let the buyer beware”. Which implies that buyer owes it to seller to inform him of his wants and that seller will fulfil them.
In a business transaction, the seller and the buyer each have to protect their rights and interests. The buyer should thoroughly inspect the products before purchasing. Because the vendor is not required to provide all information regarding the items.
Let the buyer beware: “Qui ignorance debut quod jus alienum emit”
The caveat emptor rule’s exceptions have gained more incredible notoriety than the rule itself. Since the English Sales of Goods Act of 1893 and its later revision by English Sale of Goods Act, 1979. Section 16 of the Sales of Goods Act of 1930 specifies the caveat emptor theory.
The rules are following Section 14 of the 1893 English Act. The core tenet of the caveat emptor concept is that once a customer is satisfied with a product’s suitability. He has no further right to lose that product. It implies that the buyer bears responsibility for their decision.
Sale of Goods Act, 1930
The Sale of Goods Act of 1930’s Section 16 explains the caveat emptor doctrine. Stating that there is no implicit condition or assurance as to the quality or appropriateness of the provided goods for any particular purpose.”
This general law is used in product sales. It is a Latin phrase that means “let the vendor beware”. As opposed to the more popular phrase “caveat emptor” (let the buyer beware). Beware, drivers, it says. The buyer alone is responsible for determining the suitability and quality of items before making a purchase, according to this theory. When someone purchases something, the onus is placed by the law on the buyer. To ensure that the item is free from any form of fault and that it is appropriate for his use. The phrase is frequently used in real estate deals, but it also refers to some services and other types of items.
The caveat emptor concept states that if there is no warranty, the customer assumes all risks. The buyer is now disadvantaged because of how complicated modern trade has become. Any issues a customer may have with a service or product must be handled by the seller.
Analyzing the exceptions to caveat emptor
1. Availability for purchasers’ purposes Section 16 (1)
According to Section 16(1) of the aforementioned Act, when a seller is aware of the purpose that a buyer needs to buy a specific product, either explicitly or by necessary implication, and when the goods are of a description that the seller supplies in his usual course of business and the buyer purchases that product by relying on the seller’s judgement and skill, the goods should be by the purpose. This section outlines the situations in which the seller is required to provide the goods to the customer by the purpose for which the buyer desires to purchase the goods.
Section 16(1) has the following requirements:
The buyer should inform the seller of the specific purpose for which the transaction is being made.
When buying something, the customer should trust the seller’s expertise and judgement.
The commodities must be of a type that the vendor would typically furnish in the course of his company.
2. Sale by Trade Name (proviso to S. 16(1))
In some instances, a customer chooses items based on the brand name of the product rather than the seller’s ability or judgement. In such circumstances, it would be unjust to place the burden of quality on the vendor. Such situations are covered by the proviso to Section 16. In it, it is said to: “As long as a contract for the sale of a specific product under its patent or other trade names does not contain an implicit clause requiring fitness for a certain use.
Quality fit for commerce:
Section 16(2) of the Act includes the second-most significant exception to the caveat emptor rule. The Section requires the dealer to provide the products in marketable condition.
According to Section 16(2), there is a presumption that items must be of merchantable quality when purchased by description from a seller who specialises in such commodities. In the Law Journal of Jursperitus the definition of merchantable quality suggests that when items are bought for resale, they must be allowed to be sold in the market under the name by which they are advertised.
What affects Merchanable Quality?
The following two variables affect merchantable quality:
- Marketability – A product must be marketable at its full worth to be considered marketable, even if it only appears to be salable based on appearance.”
Even if a product has flaws that render it unsuited for its intended use but are not apparent upon routine inspection, it is still not considered to be of merchantable quality.
- Reasonable fitness for general purposes
“Merchantable quality” dictates that items must be suitable for the intended use if they are bought for personal use. An illustration would be someone who purchased a hot water bottle, which is typically used to apply heat. The bottle broke, scalding the man’s wife. The vendor was held responsible.
3. Examination by buyer S. 16(2)
It states that “no implied condition relating to the fault will exist” if “the deficiencies should have been exposed upon examination of the items to be purchased.” When the buyer was given ample chance to inspect the products, the proviso’s criterion would be deemed completely satisfied. And it would not matter if the buyer chose not to take advantage of that opportunity. In these situations, the mere fact that the opportunity existed would be sufficient.
Purchase by description: When purchasing items by description from a vendor. The caveat emptor principle is not applicable because there is an indirect requirement that the goods correspond to the description. It is a clause that is fundamental to the agreement, and breaking it entitles the purchasers to reject the goods.
Products acquired under a brand name: When a buyer purchases a product under a trading name or a branded product, the seller cannot be held liable for the product’s quality or usefulness. Therefore there is no implied promise that the items would be appropriate for the use the customer intended.
4. Conditions implied by trade usage
The terms suggested by the practice of a particular trade are legally binding under section 16(3).
The following is stated in the law:
“An implied condition or warranty relating to the quality or fitness for any particular user may be appended by the practice of trade.” There is an implied guarantee or condition regarding the calibre or suitability of the goods/products. However, caveat emptor laws would apply if a buyer had departed from this. As an illustration, A brought things from B in a shipment of a ship’s cargo. However, B did not let A know that the contents were sea-damaged, so the doctrine won’t hold in this case.
Sample sales: Caveat emptor will not be in effect if the buyer purchases the products after having a representative inspect them. The buyer cannot be held liable if the remainder of the items differs from the sample; the seller will be held accountable.
Example: A asks B to order 50 ballpoint pens for her. When the pen is red, he checks the onc sample. All of the remaining pens turn out to be blue. In this instance, caveat emptor will not be applicable, and B will be held accountable.
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Fraud and false statements made by the seller: This is a significant exception. Caveat emptor does not apply if the seller obtains the buyer’s consent through deceit.
5. Fraud and misrepresentation on the part of the seller
This is a crucial exception. Caveat emptor does not apply if the seller obtains the buyer’s consent through deceit.
Additionally, if the seller conceals any material aspect of the items that a closer inspection reveals are out of time, the buyer will not be held responsible. The buyer will be in error in both scenarios.
Changing Dimensions of Caveat Emptor
Background
The common law’s stance on buyers in the 19th century can be summarised by the Latin phrase Caveat emptor, which translates as let the buyer beware. This adage says that a buyer must thoroughly consider and decide what is best for him or her. The buyer must be protected by a warranty so that they are not at risk for the condition and quality of the item they are purchasing. The caveat emptor rule was essentially based on the idea that the buyer should use his expertise and judgement before making a purchase. It is based on the fundamental tenet that once a customer is happy with a product’s fitness for his usage, he forfeits any subsequent right to reject it. There was little room for future adjustment when the caveat emptor rule was first established since it was inflexible.
It is very clear and obvious from the English Sale of Goods Act, of 1893, that the seller’s obligations in terms of the need for disclosure when a product is sold were low. There was no obligation on the part of the seller to disclose information, and the buyer’s responsibility to properly inspect the items took precedence over all other obligations. It was discouraged to use terms like “fitness of goods” and “merchantability”. That could be used to transfer the responsibility for quality and fitness onto the seller. Section 11(1)(c) of the aforementioned Act also had a strong declaration that the buyer may not reject the items on any grounds. When they were particular goods and that this was another strong statement.
As a result, it is obvious that the law was biased in favour of the seller at the time, and it was impossible to develop a rule that would have placed the burden of proof on the seller.
The Illusion and the Demand for Change
The caveat emptor principle predominated in its absolute form at the time of its inception, but it was eventually shown to be harmful to the growth of trade and commerce. Because the element of reasonable examination was absent. The caveat emptor rule in its absolute version was very harmful to the consumer. Therefore, a buyer would have no remedy against a seller who knew about a latent fault but failed to disclose it to the buyer. And who the buyer could not identify (as it cannot be detected by reasonable examination).
The necessity to protect the buyer who buys the goods in good faith, that is, when the buyer buys the items from the seller by relying on his expertise and judgement, is another compelling argument against the error of the caveat emptor rule. As a result, the rule was later changed to properly recognise the link between the seller and the buyer. Leading to a situation where business transactions are promoted.
Change to caveat emptor
For the aforementioned reasons, the rule of Caveat emptor for the first time faced opposition in the case of Priest v. Last. Where responsibility was placed on the buyer relying on their competence and judgement and they were given the first opportunity to reject the gods. In this instance, buyer relied on the ability and judgement of the seller to make a hot water bottle purchase. It was noted that if a buyer purchases an item relying on the seller’s expertise and judgement, the buyer will be permitted to reject the item should any defect appear. This was the first judgement in common law history where consideration was given to the buyer’s reliance on the seller’s expertise and judgement.
The seller’s obligations have been properly shaped over time thanks to numerous case laws and statutes that restrict the caveat emptor rule to “reasonable examination.” In situations like typhoid-infected milk and tainted beer, the courts have been kind enough to rule that the buyer is excused from this obligation if the faults could not have been found with a reasonable check under normal conditions.
Harlingdon & Leinster Enterprises Ltd v. Christopher Hull Fine Art Ltd.
It was therefore discovered that it would be utterly incorrect to say that the buyer would have the right to reject the purchased product where the buyer had greater skill in a certain sector and is more reasonable than the seller. As a result, it’s the seller’s responsibility to disclose to the buyer any product flaws as well as usage-related information. Because what matters is what he is supposed to have, not what he has. This obligation of the seller is independent of his judgement and expertise.
CASE ANALYSIS
- In Shital Kumar Saini v. Satvir Singh, the petitioner purchased a compressor using the year guarantee. Within three months, a product flaw was discovered. The petitioner sought a replacement. Although the seller replaced it, no additional warranty was offered. The State Commission allowed an implied warranty to be rejected because it was guaranteed under Section 16 of the Sale of Goods Act of 1930.
- In Peter Darlington Partners Ltd v. Gosh Co Ltd, a contract for the sale of canary seeds was ruled to be subject to trade custom. It was held that if there are any imperfections in the seeds, the buyer will receive a price reduction but he would not reject the products. An inappropriate custom, however, won’t have an impact on the parties’ contract
- It was held in Ranbir Singh Shankarsingh Thakur v. Hindustan General Electric Corporation Ltd that Section 16(1) applies where the buyer requires goods for a specific purpose and expressly or implicitly makes that purpose known to the seller, he relies on the seller’s skills. And the seller’s usual course of business is to sell such goods whether he is the actual producer or not.
CONCLUSION
The preceding explanation leads to the conclusion that the legislation protects the rights and interests of both the buyer and the seller without favouring either. It protects the seller’s rights by enshrining the Caveat Emptor theory, but it also offers exceptions under which a seller might be held accountable, and it has been stated repeatedly that the exceptions to the rule are considered more significant than the rule itself.
REFERENCES
- Jaffe, A. (2003). Caveat emptor. The American Journal of Medicine, 115(3), 241–244. https://doi.org/10.1016/S0002-9343(03)00361-9
- LAWNN.COM. (2016, April 8). The Doctrine of Caveat Emptor, Its Exceptions And Important Cases. https://www.lawnn.com/caveat-emptor/
- Marsh, T. D., & Solloway, R. G. (2005). Let the Seller Beware: The Slow Demise of Caveat Emptor in Real Property Transactions and Other Recent Developments in Indiana Real Property Law. Indiana Law Review, 38, 1317.
- Agarwal, Atishay, Caveat Emptor and its Exceptions (February 10, 2022). Jurisperitus: The Law Journal, 05(02), 82-94. , Available at SSRN: https://ssrn.com/abstract=4048268
- Caveat Emptor. (1903). The British Medical Journal, 1(2214), 1332–1333. http://www.jstor.org/stable/20276687
- Seavey, W. A. (1960). Caveat emptor as of 1960. Texas Law Review, 38(4), 439-449.
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