‘Caveat Emptor’ is a fundamental principle of the law relating to sale of goods. It means ‘Caution Buyer’, i.e., Let the buyer beware’. In other words, it is no part of the seller’s duty to point out defects of the goods he offers for sale. The buyer must examine the goods and find out their suitability for the purpose he buys them for.
Examples
a) A person buys a readymade shirt for his son, he will not have a right to return or exchange the same if the shirt doesn’t exactly fit his son, i.e., too tight or loose.
b) Pigs were sold ‘subject to all faults’, and these pigs, being infected, caused typhoid to other healthy pigs of the buyer. It was held that the seller was not bound to disclose that the pigs were unhealthy. (Goddard v. Hobbs)
Exceptions
The doctrine of ‘Caveat Emptor’ is however, subject to the following exceptions:
1. Where the seller makes a misrepresentation and the buyer relies on that representation, the rule of ‘Caveat Emptor’ will not only apply and the contract entered between the parties would be a contract voidable at the option of the buyer.
2. Where the seller actively conceals a defect in the goods, so that on a reasonable examination the same could not be discovered, or where the seller makes a false representation amounting to fraud, and the buyer, relying upon the false representation, enters into a contract with the buyer, in both these circumstances the resulting contract would be a voidable contract. The buyer’s remedy in that is that he can put the contract to an end and can also claim damages from the seller for fraud.
3. Where the buyer makes known to the seller the purpose for which he is buying the goods, so as to show that the buyer relies on the seller’s skill or judgement and the seller happens to be a person whose business is to sell goods of that description, then there is an implied condition that the goods shall be reasonably fit for such purpose. The rule of ‘Caveat Emptor’ will not apply in such cases.
4. In case of sale by description where the goods are bought from a seller who deals in such goods there is an implied condition as to their being of a merchantable quality, i.e., they should be capable of being used as such goods. For example, a cricket bat should be fit enough to play cricket with a ‘cricket ball’. If the goods are not found to be of merchantable quality, the seller cannot take the defence of the doctrine of Caveat Emptor. But, if the buyer has examined the goods, there is no implied condition as regards defects which such examination ought to have revealed, i.e., in such cases the rule of Caveat Emptor will be applicable.
5. An implied warranty or condition as to quality or fitness for a particular purpose may be annexed (attached) by the usage of trade, Section 16(3). This exception may be explained by the facts of Jones v. Bowden’s case as follows:
It was usual in the sale of drugs by auction that if the goods were sea damaged, it should be declared.
This usage in effect created an implied condition that when the drug was sold without such declaration, they were free from sea damage. In this case the seller exhibited the sample without disclosing that the drugs were sea damaged. The rule of Caveat Emptor would, therefore, not apply here.
6. Where the goods are sold by description and the goods supplied by the seller do not correspond to the description, this doctrine would not apply.
7. If the goods are sold by sample and the bulk of the goods supplied do not correspond with the sample, this doctrine would not apply. In addition to it, when the goods are delivered and the buyer is not provided an opportunity to compare the goods with the sample or where there is any latent defect in the goods, the doctrine will not apply.
8. In a sale by sample as well as by description, if the bulk of the goods supplied does not correspond to the sample as well as with description, this doctrine will not apply.
