The maxim ‘Caveat Emptor’ means “buyer beware” or ‘’let the buyer beware’’. In other words, the buyer must take care of his own interest while purchasing the goods.

The doctrine of caveat emptor has great significance in the Contract of Sale. It is a fundamental rule relating to sale in English Common Law.

The doctrine of “Caveat Emptor” is recognized under Section 16 of the Sales of Goods Act 1930, which says “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 quality or fitness for a particular purpose of goods supplied under the Contract of Sale.” If the buyer wants protection from this rule, he can do so by inserting in contract, and express condition or warranty.

DOCTRINE OF CAVEAT EMPTOR- WHEN APPLICABLE?

It is to be noted that, the doctrine of caveat emptor is applicable to ‘Potent Defects’ and not to ‘Latent Defects’. Potent Defects are those which are visible and observable. The Latent Defects, on the other hand, are those that cannot be seen or detected without specialized knowledge.

For Example: If the goods are found in broken condition, it is called Potent Defect. However, if the goods appear to be in good condition, but they lag behind some internal or technical defect they are called Latent Defects.

EXCEPTIONS TO THE DOCTRINE OF CAVEAT EMPTOR

Some of the exemptions to the Doctrine of Caveat Emptor are as follows:
1. Implied Condition: When the seller is aware of the purpose for which the buyer requires the product and when the buyer relies on the skill and judgment of the seller, there is an implied condition that the product purchased serves the purpose for which it was bought. When the goods are sold under a patent mark or trade name, this condition does not apply.
2. Sale of Goods by Description: When the buyer purchases products from the seller who sells such a class of goods, there is an implied condition that the product is of merchantable quality.
3. Usage of Trade: Custom of trade or proof of reasonable usage may also establish an implied condition with regard to the quality or fitness of goods for a particular purpose.
4. Consent by Fraud: The doctrine of Caveat Emptor shall not apply to all those purchases, which have been made by a buyer under a contract where the seller obtained his consent by fraud. A seller, who is guilty of fraud, shall have no protection of the doctrine of caveat emptor.
5. Sale under a Patent or Trade Name: In the case of a contract of sale of specified goods under its patent or trade name, there is an implied condition that the product is fairly fit for any specific purpose.
6. Sale by Sample: When a buyer, having satisfied with the quality of the sample offered by the seller, purchases in bulk, the Doctrine of Caveat Emptor will not apply when he finds defects in the bulk or if the bulk does not correspond with the product sample offered to him. The Doctrine of Caveat Emptor will not apply if the buyer did not have a chance to verify the bulk with the sample, or if there is any hidden damaged product.
7. Misrepresentation: 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.

Doctrine of Caveat Emptor Case Law I: Re Andrew Yule & Co., 59 Cal. 928
In the instant case, the plaintiff (buyer) ordered a lessain cloth for packing purpose, but did not specify the purpose. Owing to a particular smell, the cloth was not suitable for the packing. Plaintiff’s action was failed on the ground of the maxim Caveat Emptor. In case, the plaintiff(buyer) had specified the purpose of the cloth and reliance is placed on the skill and judgement of the seller, the doctrine of caveat emptor would not apply.

Doctrine of Caveat Emptor Case Law II: Jones vs. Padgett (1890) 24 QDB 650
The Plaintiff purchased from the Defendant Indigo cloth for the purpose of making liveries and did not tell the defendant the purpose. Owing to some latent defect, the cloth did not serve the purpose. In an action by the plaintiff, the defendant was held not liable under the doctrine of caveat emptor.

Doctrine of Caveat Emptor Case Law III: Mariappan vs The Inspector General of Registration and Ors. (W.P. (MD)No. 22782 of 2018)
Madras High Court observed that, “the petitioner ought to have purchased the property from the sixth respondent with due diligence and in common law application that ‘let a purchaser beware’ or in other words “Caveat Emptor”, for he ought not to be ignorant of the nature of the property which he is buying from another party.”

Doctrine of Caveat Emptor Case Law IV: Ward v. Hobbes (1878) 4 AC 13
In this case, the House of Lords held that if a seller uses a disguise to conceal the flaws or defects in the product which is to be sold, it would amount to fraud on the part of the seller; still, no duty to reveal the defects in the product is inflicted on the seller by the doctrine of caveat emptor. A duty to use care and skill while purchasing goods is imposed on the buyer by the doctrine of Caveat emptor.

Doctrine of Caveat Emptor Case Law V: Raghava Menon v. Kuttappan Nair, AIR 1962 Kerala 318
In this case, the Plaintiff purchased a wrist watch from the Defendant. The watch did not give satisfactory service inspite of the fact that the seller had tried to set it right a number of times. Plaintiff sued the seller for the replacement of the watch or the refund of the price. It was held that the seller was bound to replace the watch or, in alternative, to pay back its price. It was observed that, “the Plaintiff is a layman and he approaches a fairly reputed firm like the Defendant dealing in watches and purchases a watch from them, not for any special purpose, but for the common purpose of knowing the correct time. In such a case, Section 16 (1) of Sales of Goods Act, 1930 must apply because the buyer makes known to the seller, by implication, the purpose for which he purchased the watch and also relies on the seller’s skills or judgement.

Doctrine of Caveat Emptor Case Law VI: Frost Aylesbury Dairy Co. (1950) 1 KB 608
Plaintiff purchased milk from a milk dealer for his family’s use. The milk contained typhoid germs; the plaintiff’s wife was infected by it and died. Here the purpose for which the milk was to be used was, by implication, made known to the seller. Since the milk was unfit for human consumption, there was a breach of implied condition for which the defendant was held liable.

Doctrine of Caveat Emptor Case Law VII: Ranbir Singh Thakur v. Hindustan General Electric Corporation Ltd. AIR 1971 Bom 97
In this case, it was held that section 16 applies where the buyer requires goods for a specified purpose and he impliedly or expressly makes the seller know the purpose, the buyer relies on the seller’s skills and the seller’s usual course of business is to sell such goods whether he is the real producer or not.

Doctrine of Caveat Emptor Case Law VIII: Gedding v. Marsh (1920) 1 KB 668
In this case, the Defendant supplied some bottles of mineral water to the Plaintiff. The bottles were not the subject-matter of the sales as the empty bottles were to be returned after the contents had been consumed. One of the bottles, being defective, burst in the Plaintiff’s hand and injured her. Although the bottles were not sold and they were not to become the buyer’s property, it was held that there was, nevertheless, an implied condition that both the bottles and their contents were reasonably fit for the purpose for which they were required, and the sellers were liable to compensate the Plaintiff for breach of the implied condition.

CONCLUSION

Thus, it can be concluded that the ‘Doctrine of Caveat Emptor’ protects and secures the interests and rights of the seller as well as buyer without being partial towards any of them. This principle will help to create a more consumer-friendly market. But it should be noted that if this approach is taken too far, it might end up becoming extremely pro buyer, and then some people might end up misusing the protection under the law.