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An Analysis of The Concept of Caveat Emptor
Introduction:-
In commercial transaction it is the duty of
every buyer to be careful while buying goods
of his or her requirements and also the seller is
under an obligation to allow the buyer to examine
the goods prior to entering into contract. It is not
mandatory for the seller to disclose every defect
of his or her goods in absence of any inquiry or
asking by the buyer. The buyer should examine
the goods thoroughly for his expected purpose
and while doing so if he or she makes a mistake
and chooses defective goods or if the goods are
not suitable for his or her purpose, he or she
cannot accuse the seller or cannot shift his or
her own fault on the shoulder of the seller. Such
obligation and judgment of the buyer is known
as “caveat emptor” (buyers beware).2
The general principle of law in common
law system is that it aids the vigilant and not
the dormant. Therefore, if the buyer makes a
bad choice without exercising the option of
inspection, he must curse himself for his folly
in absence of any material misrepresentation or
fraud on the seller’s part. The Latin term “caveat
emptor” (buyers beware) gives the responsibility
of any risk in the goods on the shoulder of buyer
especially if he does not inspect the quality of
the goods. In common law, section 16 of the Sale
of Goods Act, 1930 is applicable in Bangladesh,
India etc. “The seller is not bound to supply the
goods which should be suit for any particular
purpose or which should possess any particular
quality. It is the buyer’s duty to select the goods
of this requirement. After conclusion of sale the
purchaser cannot recover the price or damages
from the seller.”3
Meaning of Caveat Emptor:-
The caveat emptor principle, that literally
means let the buyer beware, has been followed
for many years by the Courts of England. These
simple words were an easy focus for judicial
thought, a principle to be invoked when the going
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is difficult, and a guide to be followed amid the
baffling uncertainties of litigation.4 Emptor in
Latin is the buyer and the verb cavere is a verb of
caution: caveat emptor was the perfect principle
for transactions involving not massive quantity
of goods.5
This Latin term, caveat emptor, means “let
the buyer beware,” and is commonly used in
reference to purchasing real property, or used
items that do not come with a warranty. This is
a warning to buyers that they are responsible for
making sure the property or item is in suitable
condition, or that it fits their needs, before
buying. To explore this concept, consider the
following caveat emptor definition.
The term is actually part of a longer statement:
Caveat emptor, quia ignorare non debuit quod
jus alienum emit («Let a purchaser beware, for
he ought not to be ignorant of the nature of the
property which he is buying from another party.»)
The assumption is that buyers will inspect and
otherwise ensure that they are confident with the
integrity of the product (or land, to which it often
refers) before completing a transaction. This
does not, however, give sellers the green light to
actively engage in fraudulent transactions.6
The doctrine of caveat emptor is enshrined
in Section 16 of the Sale of Goods Act, 1930.
This provision corresponds to Section 14 of the
English Act of 1893. This doctrine of caveat
emptor is based on the fundamental principle
that once a buyer is satisfied with the product’s
suitability, then he has no subsequent right
to reject such product. The objective of
introducing this provision was to ensure that the
buyer purchases the product at his own risk after
being assured of the quality of the product. He
is required to use his own skill and judgment
except in cases of fraud where the doctrine of
caveat emptor does not apply.7
A Latin phrase for “let the buyer beware.”
The term is primarily used in real property
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transactions. Essentially, it proclaims that the
buyer must perform their due diligence when
purchasing an item or service. In other words,
consumers need to know their rights and be
vigilant in avoiding scams. For example in the
private purchase of a used car, caveat emptor
places an onus on the buyer to make sure the
car is worth the purchase price. This is because
once the transaction is complete the buyer will
not receive a warranty or return option from
the seller.8
Statement of Caveat Emptor:-
Section 16 of the Sale of Goods Act 1930
incorporates the principle of caveat emptor
which reads as- “Subject to the provisions of this
act or any other law for the time being in force
there is no implied condition or warranty as to
quality or fitness for any particular purpose of
goods supplied.”
Scope of Caveat Emptor: -
In Ward v. Hobbes (1878) 4 AC 13, the
House of Lords held that a vendor cannot be
expected to use artifice or disguise to conceal
the defects in the product sold, since that would
amount to fraud on the vendee; yet the doctrine
of caveat emptor does not impose duty on vendor
to disclose each and every defect in the product.
The caveat emptor imposes such obligation on
vendee to use care and skill while purchasing
such product.
In Wallis v. Russel (1902) 2 IR 585, the Court
of Appeal explained the scope of caveat emptor-
“Caveat emptor does not mean in law that the
buyer must “take a chance,” it means he must
“take care.” It applies to the purchase of specific
things, e.g. a horse, or a picture, upon which the
buyer can, and usually does, exercise his own
judgment; it applies also whenever the buyer
voluntarily chooses what he buys; it applies also
whereby usage or otherwise it is a term of the
contract, that the buyer shall not rely on the skill
or judgment of the seller.”
Principle of Caveat Emptor:-
There has always been a concern over the
unevenness of available information between
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a buyer and seller of any item or property. The
seller generally knows a lot more about the
item’s condition, history, and suitability for any
purpose than the buyer. The principle of caveat
emptor was originally intended to settle disputes
between buyers and sellers, when a buyer
complained about the item’s condition after the
purchase.
This principle is based on the understanding
that buyers have an opportunity to inspect
the item, to have it inspected by a qualified
professional, and to research its history before
making a decision to buy. This is true for
everything from buying a home, to buying a
car, or buying a stamp collection. If the buyer,
whether he takes advantage of this opportunity or
not, chooses to buy the item, he cannot blame the
seller for any deficiencies he may later discover.9
Exceptions To The Doctrine Of Caveat
Emptor:-
The doctrine of caveat emptor has certain
specific exceptions. Let us take a brief look at
these exceptions.
Fitness of Product For The Buyer’s Purpose:-
When the buyer informs the seller of his
purpose of buying the goods, it is implied that
he is relying on the seller’s judgment. It is the
duty of the seller then to ensure the goods match
their desired usage. E.g. A goes to B to buy a
bicycle. He informs B he wants to use the cycle
for mountain trekking. If B sells him an ordinary
bicycle that is incapable of fulfilling A’s purpose
the seller will be responsible. Another example
is the case study of Priest v. Last.
Goods Purchased Under Brand Name:-
When the buyer buys a product under a trade
name or a branded product the seller cannot be
held responsible for the usefulness or quality of
the product. So there is no implied condition that
the goods will be fit for the purpose the buyer
intended.
Goods Sold by Description:-
When the buyer buys the goods based only
on the description there will be an exception. If
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the goods do not match the description then in
such a case the seller will be responsible for the
goods.10
Goods of Merchantable Quality: -
The section 16 (2) deals with the exception of
merchantable quality. The sections state 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 reasonable chance
to examine the product, then this exception will
not apply.
Sale by Sample:-
If the buyer buys his goods after examining
a sample then the rule of Doctrine of Caveat
Emptor will not apply. If the rest of the goods
do not resemble the sample, the buyer cannot
be held responsible. In this case, the seller will
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.
Sale by Description and Sample: -
If the sale is done via sample as well as a
description of the product, the buyer will not
be responsible if the goods do not resemble
the sample and/or the description. Then the
responsibility will fall squarely on the seller.
Usage of Trade:- There is an implied condition
or warranty about the quality or the fitness of
goods/products. But if a seller deviated from
this then the rules of caveat emptor cease to
apply. For example, a bought goods from B in an
auction of the contents of a ship. But B did not
inform A the contents were sea damaged, and so
the rules of the doctrine will not apply here.
Fraud or Misrepresentation by The Seller:
- This is another important exception. If the
seller obtains the consent of the buyer by fraud
then caveat emptor will not apply. Also if the
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seller conceals any material defects of the goods
which are later discovered on closer examination
then again the buyer will not be responsible. In
both cases, the seller will be the guilty party.11
Important Landmark Cases Related To
Caveat Emptor:-
In contract of sale it is an obligatory duty on
the seller’s part to allow the buyer to examine
the goods to be sold before entering into contract
of sale. On the other hand, it is the buyer’s duty
to select the goods of his requirements. “It was
for the buyer to make him acquainted with
the quality and defects of the goods which he
contemplated purchasing”.
The right of the buyer to examine the goods
was originated in the case of Chandelor vs. Lopus
in the early of 17th century and later on developed
by different cases. In 17th century mutual rights
and duties of the seller and the buyer were
embodied in the case Chandelor vs. Lopus.
The case Chandelor vs. Lopus demonstrates
evolving notions of warranty, and the contract
legal theory under the English common law
specially the concept of caveat emptor. In this
case the defendant (Chandelor) was a person
who sold articles made of gold and had a special
knowledge in precious stones. This defendant
owned a stone which he affirmed to the plaintiff
Lopus was a bezar stone and sold it to Lopus for
100 (one hundred) pound. Lopus subsequently
found that the stone possessed no healing powers
(the stone forms in animal’s intestinal system and
was believed to have magical healing properties)
and sent Chandelor before the King’s Bench.
The court held that the quality of bezar which
he had not expressly warranted was a risk which
the buyer must assume and there was no fraud
in selling the stone as a bezar, so long as the
seller did not expressly warrant it to be one. The
Exchequer court held that the buyer had no right
to his money back, saying the bare affirmation
that it was a bezar stone, without warrant it be so,
was no cause of action. Before this case, the term
caveat emptor was first used by Fitz Herbert in
1534 about the purchase of a horse stating “if he
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be tame and have been ridden upon, then caveat
emptor”.
In another case Laidlaw vs. Organ paved
the way to come forward the doctrine of caveat
emptor. The defendant Organ purchased 111
(one hundred and eleven) hogsheads of tobacco
(111000 pounds) from the Laidlaw and Company
on February 18, 1815 between 8 and 9 A.M.
On the same day, news circulated that a peace
treaty had been accepted between America and
Britain, ending the war of 1812 and lifting a
naval embargo that had drastically depressed the
price of American tobacco by 30 to 50 percent.
Organ was aware of the lifting of the embargo
because his brother had informed him earlier
in that morning but Laidlaw was not aware of
the news. During the discussion of the contract
Organ was asked if he was aware of any reason
for the price to be higher; but Organ remained
silent about the news of embargo lifting. The
Chief Justice Marshall said, “However on the
questions of whether Organ had an obligation to
disclose the information he had obtained about
the end of the war, the opinion declares that the
plaintiff Laidlaw was not bound to communicate
it to Organ where the means of intelligence are
equally accessible to both parties”.
In this case of Douglas v Visser, the court’s
return to a position of caveat emptor was
disturbing. This is because, not only had the
Vissers apparently lied on the state’s required
disclosure form 17, which is required after the
sale is completed, but they had taken affirmative
and intentional actions to conceal the very
serious defects in the property.12
Common Law Doctrine Caveat Emptor and
The Protection of Consumer’s Rights and
Safety: -
i) Section 13 of the Sale of Goods Act, 1930
provides as where there is a contract for sale of
goods by description, there is an implied term that
the goods will correspond with the description.
ii) The interest of the buyer is protected where
the contract of sale depends on uberrimae fidie
(utmost good faith); law imposes a duty on the
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seller to disclose all defects because one party is
in a strong position to know the truth.
iii) The purchaser is protected where there
is misrepresentation from the seller or where
the buyer communicates his specific purpose of
goods and he relies on seller’s judgment.13
Conclusion: -
The modern trend to protect consumer’s
right has minimized the importance of rule of
caveat emptor because the rule was originated
at a time when the goods were mostly sold in
market overtly and the buyer, therefore, had
every opportunity to inspect as to the quality of
the goods. At present time most of articles are
packed and sealed by producer but still the buyer
can examine the packed goods, their descriptions
shown on the cover, expire date, brand, logo etc.
Regarding the sale of defective goods the buyer
has some remedies against the default seller in
both common law and Islamic law. In common
law it is known as “Caveat Emptor” (Buyer
be aware). It is the general rule that the buyer
should have an opportunity to satisfy himself
as to the quality of the goods for his particular
purpose and in absence of any query or unskilled
test by the buyer, the seller is not to be liable for
anything. Caveat emptor included choice, option
or exercise of power of choice, refusal or right of
withdrawal. In common law, under the doctrine
of caveat emptor the seller is only under a duty
to allow the buyer to inspect the goods himself
and nothing more. The rule of the caveat emptor
applies whenever the buyer voluntarily chooses
what he/she buys, it does not mean that the buyer
should ‹take chance› but it means he/she should
‹take care› if both the buyer and the seller are
negotiating from equal bargaining positions.
(Endnotes)
1 LLM 2 year student, Modern law College, Ganeshkh-
nd
ind, Pune
2 Abdul Malek, Anju Man Ara Begum, Kazi Arshadul
Hoque, Doctrine of “Caveat Emptor” (Buyer be aware)
in Common Law and the Doctrine of “Khiyar al aib”
(Option of defect) in Islamic Law: A Comparative
Study, ISSN 1813-7733 Vol.- 10 & 11, December 2014
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3 ibid
4 Walton H. Hamilton, the ancient maxim caveat emptor,
40 Yale L.J. (1931).
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7 Available at, https://blog.ipleaders.in/excep-
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10:56am
8 Available at, http://www.drishtiias.com/upsc-ex-
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11 Ibid
12 Available at, https://legaldictionary.net/caveat-emp-
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13 Available at, file:///C:/Users/Praveen/Down-
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58 ‘The 19 (1) (a)’ Indexed Peer Reviewed Half Yearly Law Journal