What is Caveat Emptor

In business laws, the phrase ‘Caveat Emptor’ stands for ‘let the buyer beware.’ This implies that the responsibility of identifying goods and finding defects with them lies with buyer.

He should be finalizing the goods that he needs. It implies that the seller is not responsible to enquire what the buyer’s requirements are and not required to reveal faults in his products or services.

 E.g. 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.

In an interesting case, 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 to the Doctrine of Caveat Emptor

Over time, some exceptions have been made to the rule of ‘let the buyer beware,’ in business laws. These exceptions include:

Quality: Under Section 16(1), these conditions are:

  • When the buyer makes the seller aware of the purpose for which the goods are needed.
  • When the buyer puts trust in the judgment of the seller.

Merchantability: As per section 16(3), if the goods are sold on the basis of description, there is a tacit condition that these are of merchantable quality.

Wholesomeness: This exception implies that foodstuff sold must be apt for human consumption.

Misrepresentation or fraud by seller: A condition in which a seller misrepresents the products and the buyer buys it trusting the misrepresentation, would be an exception to the principle ‘Caveat Emptor. ‘Others the chance to mislead, cheat or exploit you during any purchase or transaction.

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By Hassham

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