MAMONA YASIR
F23BLAW019
CONTRACT LAW POST MID ASSIGNMENT
CAVEAT EMPTOR
“Let the buyer beware”
Exceptions to the maxim
Introduction:
A fundamental tenet of contract law, especially when it comes to the selling of
commodities, is the Latin phrase Caveat Emptor, which translates to "let the
buyer beware." According to the doctrine, the buyer must perform their
research before making a purchase. Unless specifically requested, the seller is
not required to reveal every feature or flaw in the goods. Therefore, it is the
buyer's responsibility to evaluate the goods' compatibility and quality. This idea
originated in the past, when consumers could physically inspect products and
make well-informed choices. The limitations of this theory were made clear
with the introduction of intricate branding, packaging, and manufacturing
procedures. As a result, the law included exclusions to protect consumers from
being taken advantage of, guaranteeing trade equity.
The 1930 Sales of Goods Act's Caveat Emptor Clause Section 16 of the Sales
of Goods Act of 1930 codifies the theory. The Act makes it clear that the seller
is not liable for making sure the items are appropriate for the buyer's use unless
the contract specifies a condition or warranty on quality or fitness.
"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, except as
follows," the section states, subject to the provisions of this Act and any other
law currently in effect. This wording lays forth the buyer's responsibility to
independently check the products and presents particular situations in which the
seller is accountable.
Caveat Emptor exceptions the doctrine's exceptions are meant to shield
purchasers from excessive hardship and stop sellers from abusing the idea. The
Sales of Goods Act, 1930's extensive exclusions to Caveat Emptor are as
following:
Implied Condition about Fitness or Quality for a Specific Purpose (section
16(1))
Under this exemption, there is an implied condition that the goods will be
suitable for the specified use if the buyer informs the seller of the purpose for
which the goods are needed prior to entering into a contract and depends on the
seller's expertise or judgement.
Essential elements
• The buyer needs to let the seller know the precise goal.
• The buyer must trust the seller's expertise or discernment.
• The products must fall into a category in which the vendor specialises or
works.
In the case of Priest v. Last (1903), the plaintiff bought a bottle of hot water
from a pharmacy. While being used, the bottle burst, injuring someone. The
seller was held accountable by the court for failing to offer a product that was
suitable for its intended use since the customer had depended on the chemist's
expertise and judgement.
Practical Example:
A farmer approaches a seller for a pesticide effective against a specific pest. If
the seller provides a pesticide that fails to serve the stated purpose, the farmer
can claim damages, as the seller was informed about the intended use and the
farmer relied on the seller’s expertise.
1. Section 16(2) Implied Condition of Merchantable Quality
it is implied that items must be of merchantable quality if they are sold by
description. Merchantable quality indicates that the products are free from
concealed flaws, suitable for daily use, and satisfy the buyer's reasonable
expectations. It’s Important Points elements are as follow:
• Only in cases where the buyer has not had a fair chance to inspect the
products or where an inspection would not have shown the defect does
this requirement apply.
• Merchantable quality also takes the goods' description and pricing into
account.
In Grant v. Australian Knitting Mills (1936): A concealed flaw in the woollen
pants the buyer bought resulted in a skin irritation. Liability was imposed after
the court determined that the items were not of merchantable condition.
Example: When a buyer opens a sealed container of rice, they discover stones
and other strange objects. The vendor would be held accountable for a breach of
merchantable quality as the consumer was unable to inspect the contents prior
to purchase.
2. Section 15: Sale by Description:
It is an implicit requirement that the products match the description when they
are sold by description. Customers are shielded from receiving goods that don't
live up to their promised qualities because to this. The essential elements of this
section include:
• The buyer must trust the seller's description.
• Any divergence, no matter how small, is considered a violation.
Case law:
Beale v. Taylor (1967): After being sold as a particular model, an automobile
was later found to be a hybrid of two separate vehicles that had been welded
together. The seller was held accountable by the court since the goods did not
match the description.
An example would be a vendor marketing a refrigerator with energy-saving
features. The buyer may pursue remedies for non-compliance with the
description if the supplied product is devoid of such attributes.
3. Section 17: Sample-Based Sale
When products are offered by sample, the seller has a responsibility to make
sure that the quality of the bulk matches that of the sample. The products must
also not have any unnoticed flaws that would prevent them from being sold. Its
essential elements include:
• The buyer must have had a fair chance to contrast the sample and the
items.
• The sample and the goods must match.
• The vendor is responsible for any hidden flaws that are not visible in the
sample.
Case law:
Drummond v. Van Ingen (1887): The bulk given was of lower quality, but the
seller's fabric sample was sturdy. The seller violated the condition of sale by
sample, the court decided.
Example: A customer orders a large amount of coffee beans after receiving a
sample. The buyer may be entitled to damages if the bulk contains subpar or
flawed beans.
4. Seller Fraud or Misrepresentation
The Caveat Emptor principle does not apply if the seller wilfully hides flaws or
engages in fraud or misrepresentation. The buyer may seek damages or
terminate the agreement. Key Points include:
• Intentional deception is a component of fraud.
• Fraudulent or benign misrepresentations are both possible.
• The seller is liable if material facts are concealed.
Case Law:
Derry v. Peek (1889): This decision created the rule that a contract is
voidable due to false misrepresentation. If the vendor wilfully gives
incorrect information, the buyer is entitled to redress.
Example: A vendor promotes a smartphone with a brand-new battery
while hiding the fact that it has been reconditioned. The buyer may file a
fraud claim if they later learn of the flaw.
5. Specific Conditions and Guarantees
The seller is legally obligated to uphold any explicit terms or warranties they
may have regarding the performance or quality of the goods. The buyer is
entitled to remedies if these terms are broken.
Case Law:
In M/S Vinod Kumar Shantilal v. Bhatia Steel Tubes, the buyer's claim for
damages was upheld by the court after the seller supplied items that did not
adhere to the terms of the agreed-upon warranty.
Example: A buyer may allege breach of warranty if a supplier guarantees a car
battery would last three years, but it fails within six months.
6. Auction Sale (Section 64)
The items at auction must correspond with the auctioneer's description.
Customers are free to return items that don't live up to their promised qualities.
Example: The buyer may cancel the transaction and seek damages if a car that
was listed as "brand new" at auction turns out to have been used.
Cross-References
1. The Consumer Protection Act of 2019: Offers buyers more safeguards
and guarantees redress for faulty products or unfair business practices.
2. Contract Act, 1872: Provisions pertaining to implied terms, fraud, and
deception strengthen the protection of buyers.
3. International Sale of Goods (CISG): Similar caveat emptor caveats are
emphasised by global trade rules.
Conclusion: The doctrine of Caveat Emptor plays a vital role in commercial
transactions, emphasizing buyer vigilance. However, its exceptions ensure that
sellers cannot exploit this principle unfairly. The Sales of Goods Act, 1930,
strikes a balance by codifying these exceptions, ensuring fairness, and adapting
to modern trade practices. Together with judicial precedents and
consumercentric legislation, the legal framework empowers buyers while
maintaining a reasonable standard of seller obligations.
