Doctrine of Caveat Emptor | Business Law

Principle of Doctrine of Caveat Emptor

Subject to the provisions of this Act and of any other law for the time being 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…

– Sec. 16, The Sale of Goods Act, 1930

What is Doctrine Of Caveat Emptor?

The doctrine of ‘Caveat Emptor’ means “let the buyer beware“.

In other words, the buyer must take care of his own interest while purchasing the goods. While purchasing the goods the buyer should check the goods carefully.

If a buyer purchases the goods and after it, he comes to know that these are defective. In this case, the seller will not be responsible for this defect.

The object of this principle is to make the buyer more careful in purchasing. It is his duty that he should check the quality and fitness of the commodity which he needs.

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Example of Doctrine Of Caveat Emptor

Mr Anuj went to the market and purchased a Car to take a part in Car race competition. But he did not tell the seller that for which purpose he is buying. When he reached home, he came to know that this car is not suitable for car race competition. Due to the principle of Caveat Emptor, Mr Anuj can neither reject the bike nor can claim for compensation.

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Exceptions of Doctrine Of Caveat Emptor

However, in the following exceptions, the Doctrine of caveat emptor is not applicable.

1. Fitness for buyer’s purpose – Sec. 16(1)
2. Sale under a Trade or Patent name – Sec. 16(1)
3. Merchantable Quality – Sec. 16(2)
4. Usage of Trade – Sec. 16(3)
5. Consent by Fraud

Fitness for buyer’s purpose

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.

Sale under a trade or patent name

When the buyer purchases products from the seller who sells goods of trade or patent mark, there is an implied condition that the product is of merchantable quality.

Merchantable Quality

There is a custom or tradition where a seller has been dealing in goods which are according to the accepted description. For instance, a bicycle would be one that is technically made for transport by peddling and that is in condition corresponding to its product description. It is a reasonably good product and the buyer may well assume it to be so.

Usage of Trade

An implied warranty or condition as to its quality and fitness for a particular purpose may be annexed by the usage of trade.

Consent by Fraud

It happens when the seller knowingly conceals the defects which could not be discovered by the buyer with the reasonable application of skill and judgement at the time of purchase. The consent is obtained by fraud and, hence, the seller cannot charge the buyer for his negligence to examine.

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Business Law Notes

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Business Law Book References

1. Goel, P. K. (2006). “Business Law for Managers” Wiley
2. Sheth, T. (2017). “Business Law” (2ed.) Pearson.
3. Kuchhal. M.C. & Prakash. “Business Legislation for Management” (2ed.) Vikas Publishing.

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