The doctrine of ‘Caveat Emptor’ means “let the buyer beware”. It means the buyer while purchasing goods must act with a “third eye and ear”, i.e., • He should pay attention to determine that the products purchased will serve his purpose well. • If the buyer isn't careful and he finds afterward that the products don't serve his purpose, he cannot hold the vendor answerable for it. • the vendor is under no obligation to inform the defects of his articles. Origin
Caveat Emptor is Latin for “let the buyer beware,” meaning that the buyer alone is liable for checking the standard and suitability of products before making a sale, a warning to buyers that the sellers aren't bound to volunteer negative information about the items they're selling.
The intent is to place responsibility on the buyer to ask the suitable questions on an item before completing a sale — that's, to make an informed buying decision. A seller is additionally shielded from liability for buyer's remorse. Especially applicable to items that are not covered under a guaranty, assuming no fraud has been committed.
Caveat emptor is an old principle that intends to resolve disputes when the seller knows more than the buyer about the quality of products or services. The burden is put on on the buyer to make an informed purchase. If the seller lies about the item being sold, he/she would commit fraud, and thus the buyer would, in theory, be entitled to damages.
Chandelor v Lopus (1603), a famous case in the common law of England, gave rise to the rule of caveat emptor and thus the distinction between warranties and mere affirmations.
In the U.K., the concept of principle is applicable than in the past. In general, the 1979 Sale of Goods Act provides consumers with more stringent protections than their U.S. counterparts.
Its mirror is caveat venditor (let the vendor beware), a warning to sellers that, unless they expressly disclaim any responsibility, they are going to be held liable if the sold items are found either to be defective or to be varying from the specifications.
The Doctrine of Caveat Emptor
The doctrine of caveat emptor is an integral part of the Sale of goods Act. It translates to “let the buyer beware”. This suggests that it lays the responsibility of their choice on the buyers.
It is defined in Section 16 of the act “there isn't any implied warranty or condition on the quality or the fitness for any particular purpose of goods supplied under such a contract of sale “
A seller makes his goods available within the open market. the buyer previews all his options then accordingly makes his choice. Now let’s assume that the goods seem to be defective or of inferior quality.
This doctrine says that the vendor won't be liable for this. the buyer himself is liable for the selection he made.
So the doctrine helps to make the buyer more conscious of his choices. the buyer must ascertain the quality and thus the usefulness of the merchandise he's purchasing. If the merchandise seems to be defective or doesn't live up to its potential the vendor won't be liable for this.
Example: A bought a car from B. A wanted to enter the car into a race but the car was not capable of running a race on account of being old and not having special features for racing. But A didn't inform B of his intentions. So B won't be liable for the defects of the car. The Doctrine of Caveat Emptor would apply.
However, the buyer can shift the responsibility to the vendor if the three following conditions are fulfilled.
• if the buyer shares with the vendor his purpose for the purchase.
• the buyer relies on the knowledge and/or technical expertise of the vendor.
• and therefore the seller sells such goods.
Exceptions to the Doctrine of Caveat Emptor
The doctrine of caveat emptor has certain specific exceptions. Let us take a look at these exceptions.
1] Product’s fitness for the Buyer’s Purpose
When the buyer informs the vendor of his purpose of buying the products, it's implied that he's counting on the seller’s judgment. It is the duty of the vendor to make sure the products match their desired usage.
Say for instance A goes to B to buy a bicycle. He tells B he wants to use the cycle for mountain trekking. If B sells him a standard bicycle that's incapable of fulfilling A’s purpose the vendor is going to be responsible. Another example is that the case study of Priest v. Last.
2] Goods Purchased under Brand Name
When the buyer buys a product under a trading name or a branded product the seller cannot be held responsible for the usefulness or quality of the product. So there's no implied condition that the products are going to be fit the aim the buyer intended.
3] Goods sold by Description
When the buyer buys the products based only on the description there'll be an exception. If the products don't match the description, then in such a case the vendor is going to be liable for the products.
4] Goods of Merchantable Quality
Section 16 (2) deals with the exception of merchantable quality. The sections mention that the seller who is selling goods by description has a duty of providing goods of merchantable quality, i.e. capable of passing the market standards.
So if the goods are not of marketable quality then the buyer will not be the one who is responsible. It will be the seller’s responsibility. However, if the buyer has had an inexpensive chance to look at the merchandise, then this exception won't apply.
5] Sale by Sample
If the buyer buys his goods after examining a sample, then the rule of Doctrine of principle won't apply. If the remainder of the products doesn't resemble the sample, the buyer can't be held responsible. In this case, the vendor is going to be the one responsible.
For example, A places an order for 50 toy cars with B. He checks one sample where the car is red. The rest of the cars turn out orange. Here the doctrine will not apply and B will be responsible.
6] Sale by Description and Sample
If the sale is completed via a sample also as an outline of the product, the buyer won't be responsible if the products don't resemble the sample and/or the description. Then the responsibility will fall squarely on the vendor.
7] Usage of Trade
There is an implied condition or warranty about the standard or the fitness of goods/products. But if a seller deviated from this then the rules of principle cease to use. For example, A bought good from B in an auction of the contents of a ship. But B did not inform A contents were sea damaged, and so the rules of the doctrine will not apply here.
8] Fraud or Misrepresentation by the Seller
This is another important exception. If the vendor obtains the consent of the buyer by fraud, then the principle won't apply. Also if the vendor conceals any material defects of the products which are later discovered on closer examination but the buyer won't be responsible. In both cases, the vendor is going to be the culprit.
Thus, the pendulum is moving in favor of the buyer. The age-old principle of caveat emptor may now disappear within the favor of the new principle of caveat venditor that's directed towards a replacement Consumer Protection System. Such a change won't only balance between the rights and obligations of the vendor and therefore the buyer. But it should be noted that if this trend of change is taken too far, we would end up retarding transactions due to the approach then becoming extremely pro-buyer who might misuse the protection under the law. Thus, the doctrine of caveat emptor is going to be applied only firstly, the vendor has all knowledge about all implied conditions and warranties, secondly, the vendor would be liable for loss on account of sale if the products don't come up to the quality required by law albeit he has taken all possible care, thirdly, the vendor must disclose all the facts regarding the product so on avoid conflict. The principle of Caveat Venditor is often justified where there's disproportionate of power between the vendor e.g. big companies contracting with a consumer) but it's totally against the principle of laissez-faire when this principle isn't present because the buyer is additionally contracting within the course of the business.