OCTRINE OF CAVEAT EMPTOR | EXAMPLE | MEANING | EXCEPTIONS

What is Caveat Emptor?

The maxim Caveat Emptor means let the buyer beware. In other words, the buyer
must take care of his own interest while purchasing the goods.

What is Doctrine of Caveat Emptor, What are the exemptions

Buyer in a contract of sale of specific goods will purchase them at his own risk with
regard to the quality or fitness of the goods except in case of fraud or where a
condition to that effect is laid down in the contract itself.

Buyer cannot hold the seller liable if the goods turn out to be defective or do not
suit his purpose or if the buyer makes a mistake in assessing the quality of the
goods. It is for the buyer to ensure at the time of purchase that the goods conform
to his requirements.

When a person buys some goods, it is his duty to examine them thoroughly.
Generally, goods are purchased when the buyer is satisfied with its quality and
need. Hence, the goods is purchased by the buyer at his own risk and to his best
judgement. If the goods do not suit the purpose, he cannot blame anybody except
himself. The buyer has to bear the consequences of his wrong selection of goods.

Example to Doctrine of Caveat Emptor

There was a sale by sample by a woolen manufacturer of cloth to merchant, who
was also a tailor. The cloth was required for making liveries But the fact was not
made known to the seller. On account of the latent defect in the cloth, liveries could
not be made out of it. But there was nothing to show that it was unfit for other
purposes. Held the buyer was without remedy due to non-communication of the
purpose for which the cloth was required.

Exceptions to the Doctrine of Caveat Emptor

The following are some of the exemptions to doctrine of Caveat Emptor.

1. Implied Condition regarding Quality or Fitness

When the seller is aware of the purpose for which the buyer requires the product
and when the buyer relies on the judgement and skill of the seller, there is an
implied condition that the product purchased serves the purpose for which it was
bought. When the goods are sold under a trade name or patent mark, this condition
does not apply.

2. Sale of Goods by Description

When the buyer purchases products from the seller who sells such class of goods,
there is an implied condition that the product is of merchantable quality.
3. Usage of Trade
Proof of reasonable usage or custom of trade may also establish an implied
condition with regard to quality or fitness of goods for a particular purpose.

4. Consent by Fraud
The doctrine of Caveat Emptor shall not apply to all those purchases, which have
been made by a buyer under a contract where the seller obtained his consent by
fraud. A seller, who is guilty of fraud, shall have no protection of the doctrine of
caveat emptor.

5. Sale under a Patent or Trade name

In the case of a contract of sale of specified goods under its patent or trade name,
there is an implied condition that the product is fairly fit for any specific purpose.
6. Sale by Sample
When a buyer, having satisfied with the quality of the sample offered by the seller,
purchases in bulk, the Doctrine of Caveat Emptor will not apply when he finds
defects in the bulk or if the bulk does not correspond with the product sample
offered to him. The Doctrine of Caveat Emptor will not apply if the buyer did not
have a chance to verify the bulk with the sample, of if there is any hidden damaged
product.

7. Misrepresentation
Where the seller has made a false representation relating to the goods and the
buyer has relied upon it, the doctrine of Caveat Emptor will not apply. Such a
contract being voidable at the option of the innocent party, the buyer has a right to
rescind the contract.