1.
Discuss the principle of Caveat Emptor and its exceptions with
suitable case laws.
Ans. The principle of Caveat Emptor, meaning "let the buyer beware," is
a fundamental doctrine in the law of sale of goods. It essentially places
the responsibility on the buyer to satisfy themselves as to the quality and
suitability of goods before purchasing them. The seller is generally under
no duty to reveal defects in the goods they are selling, provided they do
not actively conceal them or make false representations.
Basically, this Doctrine of Caveat Emptor, a Latin phrase meaning "let
the buyer beware," is a fundamental principle in contract and commercial
law. This doctrine places the responsibility on the buyer to exercise
caution and due diligence before purchasing a product or entering into a
transaction. The seller is not obligated to disclose every defect in the
goods unless the law or the contract specifically mandates such
disclosure.
However, there are exceptions where the principle does not apply, such
as in cases of fraud, misrepresentation, or when goods do not conform
to the contract terms.
Key Principles Of The Doctrine Of Caveat Emptor
The Caveat Emptor doctrine is subject to a number of rules. Among
them are:
Buyer Accountability
It is the buyer's responsibility to check the product before purchasing it
and make sure it meets their needs.
Seller Accountability
The vendor shall not mislead the consumer or fabricate the product.
Information Asymmetry
The buyer bears the risk of problems since the seller often knows more
about the goods than the customer does.
No Way to Hold the Vendor Accountable
If the buyer is dissatisfied with the products, they have no legal remedy
against the vendor.
No Harm from the Vendor
The buyer cannot sue the seller for damages if they did not inspect the
goods and they had flaws that could have been shown with a practical
evaluation.
Due Diligence
Customers can use due diligence to protect themselves from fraud and
subpar goods.
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.
Exception To The Rule Of Doctrine Of Caveat Emptor
There are a few notable exceptions to the caveat emptor principle. Let
us examine these as follows:
* Fitness for a Particular Purpose (Section 16(1) of the Sale of
Goods Act, 1930):
The customer is presumably depending on the seller's judgment when
he tells him why he is purchasing the products. The vendor is then
responsible for making sure the products are suitable for the intended
use. Where the buyer, expressly or by implication, makes known to the
seller the particular purpose for which the goods are required. For
instance, A tells B, a shoe vendor, that he wants to buy running shoes. B
can be held accountable if he continues to offer him shoes that are not
meant for running.
* Case Law: Priest v. Last [1903] 2 KB 148. In this case, a buyer
purchased a hot water bottle from a chemist, informing him that it was for
his wife. The bottle burst and injured his wife. The court held that the
buyer had impliedly made known the particular purpose, and the chemist
was liable as the bottle was not fit for that purpose.
* Sale by Description (Section 15 of the Sale of Goods Act, 1930):
The vendor is not responsible if the buyer buys the products based on a
description that accurately describes the item. The vendor will only be
responsible if he gives a false description of the products.
Where there is a contract for the sale of goods by description, there is
an implied condition that the goods shall correspond with the description.
* Sale by Sample (Section 17 of the Sale of Goods Act, 1930): In a
contract for sale by sample, there is an implied condition that the bulk
shall correspond with the sample in quality, that the buyer shall have a
reasonable opportunity of comparing the bulk with the sample, and that
the goods shall be free from any defect, rendering them
unmerchantable, which would not be apparent on reasonable
examination of the sample.
* Case Law: Drummond & Sons v. Van Ingen & Co. (1887) 12 App
Cas 284. In this case, a sample of cloth was shown, but the bulk
delivered contained a latent defect not discoverable on reasonable
examination of the sample. The House of Lords held that the seller was
liable.
* Trade Usage (Section 16(3) of the Sale of Goods Act, 1930): An
implied warranty or condition as to quality or fitness for a particular
purpose may be annexed by the usage of trade.
* Fraud or Misrepresentation by the Seller (Section 17 of the Indian
Contract Act, 1872): If the seller makes a false representation or
actively conceals a defect which the buyer could not have discovered
with ordinary diligence, the principle of Caveat Emptor does not apply.
The contract is voidable at the option of the buyer.
* Sale under a Brand Name or Patent Name (Proviso to Section
16(1) of the Sale of Goods Act, 1930): Where the buyer purchases
goods under a specified patent or trade name, there is no implied
condition as to their fitness for any particular purpose. The buyer relies
on their own judgment of the brand.
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.
Understanding Caveat Emptor and its exceptions is crucial in
commercial transactions to determine the rights and liabilities of both
buyers and sellers regarding the quality of goods. The exceptions
demonstrate a shift towards protecting buyers against unfair practices
and ensuring a certain level of responsibility on the part of the seller in
specific circumstances.
2. Explain how the transfer of title on Sale takes place? State with
exceptions if any.
The transfer of title (ownership) of goods from the seller to the buyer is a
fundamental aspect of a contract of sale. Section 18 to 25 of the Sale of
Goods Act, 1930 lay down the rules governing the passing of property in
goods. The general principle is that property in specific or ascertained
goods is transferred to the buyer at such time as the parties to the
contract intend it to be transferred.
The intention of the parties can be inferred from:
* The terms of the contract: Explicit clauses regarding the transfer of
ownership.
* The conduct of the parties: Actions and circumstances surrounding the
sale.
* The usages of trade: Common practices in the particular business.
Unless a different intention appears, the following rules apply for
ascertaining the intention of the parties as to the time when the property
in specific goods is to pass to the buyer:
* Section 20: Specific goods in a deliverable state: Where there is an
unconditional contract for the sale of specific goods in a deliverable
state, the property in the goods passes to the buyer when the contract is
made, and it is immaterial whether the time of payment or the time of
delivery, or both, is postponed.
* Section 21: Specific goods to be put into a deliverable state: Where
there is a contract for the sale of specific goods and the seller is bound
to do something to the goods for the purpose of putting them into a
deliverable state, the property does not pass until such thing is done and
the buyer has notice thereof.
* Section 22: Specific goods in a deliverable state, when the seller has
to weigh, measure, test, or do some other act or thing with reference to
the goods for the purpose of ascertaining the price: Where there is a
contract for the sale of specific goods in a deliverable state, but the seller
is bound to weigh, measure, test, or do some other act or thing with
reference to the goods for the purpose of ascertaining the price, the
property does not pass until such act or thing is done and the buyer has
notice thereof.
* Section 23: Sale of unascertained goods and appropriation:
* (1) Where there is a contract for the sale of unascertained or future
goods by description and goods of that description and in a deliverable
state are unconditionally appropriated to the contract, either by the seller
with the assent of the buyer or by the buyer with the assent of the seller,
the property in the goods thereupon passes to the buyer. Such assent
may be express or implied, and may be given either before or after the
appropriation is made.
