Rule of Caveat Emptor

by

[JUSTICE ® DR. MUNIR AHMAD MUGHAL]

August 2011

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 ‫اﻟرﺣﯾم‬
ّ ‫اﻟرﺣﻣن‬
ّ ‫ﺑﺳم ﷲ‬
Rule of Caveat Emptor
[Justice ® Dr. Munir Ahmad Mughal]

Caveat emptor is a combination of

two Latin words.
Caveat means caution or warning or
beware; and Emptor means the
buyer, the purchaser.
Caveat emptor means: Let the
purchaser beware.
It is a disclaimer of liability for buyer’s
disappointment. It is one of the
settled maxims, applying to a
purchaser who is bound by actual as

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well as constructive knowledge of
any defect in the thing purchased,
which is obvious or which might have
been known by proper diligence.

Caveat emptor does not mean either

in law or in Latin that the buyer must
take chances; it means that the
buyer must take care. [Wallis v.
Russell (1902) 21 R 585, 615].
Caveat emptor: qui ignorare non
debuit quod jus alienum emit. A
maxim meaning “Let purchaser
beware; who ought not to be ignorant
that he is purchasing the rights of

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another [Hob 99; Broom: Co. Litt.
102 a; Taunt 439]
As the maxim applies, with certain
specific restrictions, not only to the
quality of , but also to the title to, land
which is sold, the purchaser is
generally bound to view the land and
to enquire after and inspect the title-
deeds, at his peril if he does
not.[Latin for Lawyers].

Upon a sale of goods the general

rule with regard to their nature or
quality is caveat emptor, so that, in
the absence of fraud, the buyer has

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no remedy against the seller for any
defect in the goods not covered by
some condition or warranty,
expressed or implied. It is beyond all
doubt that, by the general rules of
law there is no warranty of quality
arising from the bare contract of sale
of goods, and that where there has
been no fraud a buyer, who has not
obtained an express warranty, takes
all risk of defect in the goods, unless
there are circumstances beyond
mere fact of sale from which a
warranty may be implied. [Bottomley

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v. Bannister, [1932] 1 KB 458; Ward
v. Hobbs, 4 App Cas 913). Latin For
Lawyers].

WHERE TO FIND THE RULE OF

CAVEAT EMPTOR IN PAKISTANI
LAW?

In Pakistani Law the rule of Caveat

Emptor has been embodied in
section 16 of the Sale of Goods Act,
1930, which states:

“ Subject to the provisions of this Act

and any other law for the time being

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in force 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.”

The doctrine of caveat

emptor passes the responsibility on
the shoulder of buyer. It puts
emphasis on the buyer to check,
examine and test the goods to save
him from being deceived. A buyer
must employ best of his discretion,
not less than the discretion of a

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common man, while purchasing
goods.
No one ought to ignore to buy that
which is the right of another. The
buyer according to the maxim has to
be cautious, as the risk is his and not
that of the seller.

EXCEPTIONS TO THE RULE

OF CAVEAT EMPTOR
There are eight exceptions to this
rule of caveat emptor. They are:

1.PURCHASE BY DESCRIPTION
The rule of caveat emptor does not
apply in a case where goods are

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bought by description from a seller.
In such a situation there is an implied
condition that the goods shall
correspond with the description. It is
a condition which goes to the root of
the contract, and the breach of it
entitles the buyers to reject the
goods.
2. PURCHASE BY SAMPLES AND
DESCRIPTION
Where goods are bought by sample
as well as by description and the bulk
of goods do not correspond with the
sample or with the description, the

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buyer is entitled to reject the goods.
The rule of caveat emptor shall not
apply in such a case.
3. FITNESS FOR PURPOSE
Where the buyer informs the seller
the particular purpose for which the
goods are required and relies upon
the seller’s skill or judgment there is
in that case, an implied condition that
the goods shall be reasonably fit for
the purposes for which they are
required.

4. TRADE NAME

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In the case of a contract for the sale
of a specified article under its patent
or other trade name, there is no
implied condition as to its fitness for
any particular purpose.

5. MERCHANTABLE QUALITY
Where the goods are bought by
description from a seller who deals in
goods of that description whatever
he is manufacturer or producers or
not, there is an implied condition that
the goods shall be of merchantable
quality.

6. USAGE OF TRADE

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Where the usage or trade annexes
an implied condition or warranty as to
quality or fitness for a particular
purpose and seller deviates from
that, then this rule (of caveat emptor)
does not apply.

7. SALE BY SAMPLE
In a sale of goods by sample, the
rule of caveat emptor does not apply
if the bulk does not correspond with
the sample or if the buyer is not
given an opportune ity to compare
bulk with the sample.

8. CONSENT BY FRAUD

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Where the seller makes a false
statement intentionally to the buyer
and the buyer relies on it or where
the seller knowingly conceals the
defects in the good, the doctrine of
caveat emptor does not apply.

Contracts are made up of various

statements and promises which differ
in character and importance; the
parties may regard some of them as
vital, as subsidiary or collateral to the
main purpose of the Contract.

Where parties regard the term

essential it is a condition. Where

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parties do not regard it as essential it
is warranty. The general rule is that
where a stipulation in contract of sale
with reference to goods which are
the subject thereof may be a
condition or a warranty.

A condition is a stipulation essential

to the main purpose of the contract,
the breach of which gives rise to a
right to treat the contract as
repudiated.

A warranty is also a stipulation but it

is not essential to the main purpose
of the contract. Rather it is collateral

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to the main purpose of the contract
and the breach of it gives rise to a
claim of damages but not to a right to
reject the goods and treat the
contract as repudiated.

A condition is a vital term of the

contract. A vital term is that term
which goes to the root or substance
of the contract. Its non fulfillment
causes irreparable loss to the injured
party. In case of violation of a
condition the injured party gets a
right to cancel the contract. The party
can refuse to accept the goods. If the

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injured party has already paid the
price he can recover it. A breach of
condition may be treated as a breach
of warranty. The buyer in case of
breach of condition has an option to
claim damages instead of repudiating
the contract.

A warranty is not a vital term of the

contract. It does not go to the root or
substance of the contract. In case of
violation of a warranty the injured
party has a right to recover damages
only. The party cannot refuse to
accept the goods nor can he reject

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the contract. A breach of warranty
cannot be treated as breach of
condition. The buyer in case of
breach of warranty cannot repudiate
the contract; his only right is that he
can claim damages.

Conditions when incorporated in

clear words in a deed by a party
those are called express conditions.
Where conditions are not
incorporated in the contract but the
law presumed their existence in the
contract they are called implied
conditions. Thus unless otherwise

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agreed, the law includes the
following into a contract:

(i) Implied conditions as to titles:

In every contract of sale there is an

implied condition that the seller has a
right to sell the goods and in an
agreement to sell he has a right to
sell the goods at the time when the
property is to pass. The transfer of
title to the goods can only be made
either by the owner or an agent.

(ii) Sale by description:

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Goods must correspond to the
description.

(iii) Sale by Sample:

Goods must be according to the

sample agreed upon. In the case of
Lorimar v. Smith the seller sold two
parcels of wheat by sample and
showed only one parcel and refused
to show the other. The buyer
examined it after a week and the
Court held that buyer can cancel the
contract.

(iv) Sale by Sample and Description:

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Goods must correspond to both. If
they correspond to only sample or
only description the buyer is entitled
to reject the goods.

(v) Fitness or Quality:

Where buyer expressly or by

implication makes known to the seller
that goods are required for a
particular purpose and that he relies
on the skill or judgment of the seller
in that behalf and the goods are of a
description which it in the course of
seller's business to supply then there
is an implied condition that the goods

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shall be reasonably fit for such
purpose.

(vi) Merchantability:

Where goods are bought from a

seller who deals in goods of that
description, whether he is the
manufacturer or producer or not,
there is an implied condition that the
goods shall be of merchantable
quality.

(vii) Wholesomeness:

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In a contract of sale of eatables and
provisions goods must be
merchantable and wholesome also.

Implied Warranties:

(i) Quiet Possession to be given to

the buyer.

(ii) Free from any charge or

encumbrance; and

(iii) Usage of trade: An implied

warranty as to quality or fitness for a
particular purpose may be annexed
by usage of trade.

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