RULE OF CAVEAT

EMPTOR

Mohammad Ansar Kaifi

Mba 2nd sem <17>
Caveat emptor
 Caveat Emptor is a Latin phrase meaning "let the
buyer beware“.
 Let the buyer beware: the principle that the seller of a
product cannot be held responsible for its quality
unless it is guaranteed in a warranty. 
 For example, you buy a used car which you are told is
in perfect condition, but it immediately breaks down
OR you buy a house, but it has termites.
 It merely summarizes the concept that a purchaser
must examine, judge, and test a product considered
for purchase himself or herself.
Caveat emptor
 Under this doctrine the buyer
takes the risk on an item he purchases and
cannot complain of a defect.
 Unless there is either fraud or warranty
(guarantee) by the seller, the rule applies to
the sale of personal property.
 The buyer and seller have equal access to
information about the item and the buyer is
able to make personal inspection.
example>
 Suppose Ram bought 10 cows from a cattle broker.
Out of those 10, 2 cows had defects. However, Ram
did not know this because he didn’t check all 10 cows
though he paid for them. Guess what happened? The 2
infected cows died within three days of the purchase.
Now, as there was no tacit condition that the cows
would be in great health at the time of the sale, Ram
cannot hold the cattle broker as responsible for having
sold him those infected cows. It was Ram’s basic duty
to check the health of those cows and not expect the
cattle broker to state all the defects.
Case study
 Jones vs. Padgett
 The buyer bought cloth for making uniforms.
However, the seller was not aware of the
purpose of buying the cloth.
 Later, the buyer found that the cloth is not fit
making uniforms. It was, however, fit for other
normal purposes.
 The seller was not found guilty as the principle
of ‘caveat emptor’ applied in this case.
Exceptions of caveat emptor

 When there is a fraud by the seller.

 When the buyer intimates the purpose
for purchasing a product or item .
 Where the goods are bought by sample and
if the Bulk does not correspond with the
sample, or sample, or if there is any hidden
or latent defect in the goods
Cont …
 Where the buyer makes known to the seller
the purpose for which he requires the
goods and relies upon the sellers skill
and judgment but the goods supplied
are unfit for the specified purpose.
 Caveat emptor in modern
scenario
 The doctrine of caveat emptor has been
greatly limited in modern times as a result of
changes in marketing conditions and the
growing complexity of industrial processes.
 Owing to scientific and industrial
development, many products are so
complicated that only experts can evaluate
them, and the buyer has to rely on the
knowledge and good faith of the seller.
CAVEAT VENDITOR

 Caveat venditor is latin  for "let the seller

beware".
 It is a counter to caveat emptor.
 This forces the seller to take responsibility
for the product and discourages sellers from
selling products of unreasonable quality.
Reason for dilution of caveat emptor and
origin of caveat venditor
 caveat emptor in its absolute from would certainly be
detrimental to the buyer’s cause because a buyer would not
have any recourse against a seller who has in spite of being
aware of a latent defect (one which cannot be detected by
reasonable examination) not informed the buyer about the
same.
 Another sound reason, is to provide adequate protection to
the buyer who buys the good in good faith.
 Thus in order to give proper recognition to the relationship
between the buyer and the seller and to generate a scenario
wherein commercial transactions are encouraged by the
means of proper checks , the rule was subsequently diluted.
Conclusion
 the rule of caveat emptor is dying a slow death
and is being taken over by the subsequent rule
of caveat venditor.
 the change being attributed to a more consumer
oriented market wherein commercial
transactions are being encouraged.
 It will create an appropriate balance between
the rights and obligations of the seller and the
buyer.
 origination

THANK
YOU
Modern scenario