SHIFT FROM CAVEAT EMPTOR

TO CAVEAT VENDITOR
Introduction
Buyer is a person who buys or agree to buy goods or services,
Section 2(1) of Sale of goods act 1930 defines a buyer as the person who buys or
agrees to buy goods for valid consideration. Where as a Seller is a person who sells
goods or services for the sole purpose of doing economic activity so as to earn profits.
Section 2(13) of Sale of goods act 1930 defines a seller as a person who sells or
agrees to sell goods or services for a valid legal consideration.

As a maxim of early common law Caveat Emptor is a latin term which when
converted to english means ‘let the buyer beware’ where caveat means a warning and
emptor means buyer. Or in simpler terms buyer has no recourse if the product fails to
meet the expectations especially applicable to the items not that are not covered under
strict liability.
Under this principle of caveat emptor, suppose a buyer buys a glass show piece and
later discovers that the show piece is defected with cracks, had they inspected the
product prior to sale, they may have changed their mind. The burden of responsibility
is on the buyer for the quality of the product.
Whereas Caveat venditor is a latin term which contradicts the very meaning of caveat
emptor, it means that ‘let the seller beware’. The person selling goods would be
responsible for the information of the product to be informed to the buyer prior to the
sale. This compels the seller to take responsibility for the defective goods sold and
encourages them from not selling products of unreasonable quality.

Caveat Venditor by such means puts the responsibility on the seller for not selling
unqualified/defective goods and informs buyer/consumer of information about the
goods, if done otherwise shall be held liable. The rights of buyers against consumers
are protected under Consumer protection act 1986.

Consumer protection act, 1986

This act was passed in 1986 in favour of the need to protect the interests of the
consumer from unfair practices done by the seller.
Since the concept of Caveat emptor was falling and in order to balance the economy
between buyers and sellers, this act was passed in support of the buyers so as to make
sure they don’t become a victim of exploitation by any seller.
‘The Consumer Protection Act, 1986 seeks to provide for better protection of the
interests of consumers and for the purpose, to make provision for the establishment of
Consumer councils and other authorities for the settlement of consumer disputes and
for matters connected therewith​’
Basic rights of the consumer against the seller are provided in Section 6 of the
consumer protection act, 1986. These rights include:

● 1.Right to seek protection against hazardous goods

● 2.Right to consumer information
● 3.Right against unfair trade practices
● 4.Right to be heard
● 5.Right to consumer education

Section 2(1)(r) states the list of unfair trade practices which can be done by a seller in
order to deceive a buyer like false representation of the quality of the goods, falsely
representing second hand goods as new, falsely providing information of the goods
etc. and duties of buyers and sellers are mentioned in Section 31 of Sales of goods
Act, 1930.
A consumer can file a case and seek compensation/damages in court if a seller
exploits by any of the means provided in the section. And in a country like India
where almost 53 lakh consumer dispute cases were filed since inception and with the
disposal rate of 90% there are still approximate 5 lakh cases pending in India, it takes
time but justice is served.

Key words
Buyer, Seller , Caveat Emptor, Caveat Venditor.

Objectives
Q1. What led to the decline of the maxim ‘Caveat Emptor’?
Q2. How did the concept of Caveat Venditor get its recognition?

INTERPRETATION

HISTORY
Section 16 of Sale of goods act reflects out the essence of maxim caveat emptor, it is
specifically defined in the act that “​there is no implied warranty or condition as to
quality or fitness for any particular purpose of the products supplied under such
contract of sale”.
As a maxim of early common law Caveat Emptor in easy terms refers to as it is the
duty of the buyer to examine the product/good before buying it, because once the
buyer satisfy himself with the suitability of the product with his needs, he would have
 no right to decline if the product comes out unsatisfactory, Or if it comes out to be
defective after purchasing, seller would not be liable for any such defect. The maxim
was very much rigid in the initial stages of its existence.​1
With respect to the maxim aspects like fitness of goods and merchantability played an
important role in purchase of goods which when neglected and the buyer could not
reject goods on such grounds..
Caveat emptor originated at the time when the goods were mostly sold in market
overtly and the buyer therefore, had every opportunity to inspect as to the quality of
the goods,
Another reason why caveat emptor has been given more importance in those times so
as to encourage more and more trade and economic activities, hence industrialisation.
Even the law was proportionally bent more towards the favour of sellers, putting the
obligation or responsibility on the buyer and giving unfair immunity to the sellers. So
much for the motive of development.
Caveat emptor originated from the case of ​Chandelor v. Lopus2​ in early 17th century,
where chandelor the defendant sold a stone which he affirmed to the plaintiff to be a
Bezar stone (which possess healing power) for 100 pounds, plaintiff discovers later
that the stone does not possess such healing powers and claims his money back, in
this case the court held that had there been a situation where the defendant gave
warranty for the stone, any defect would have lead to full compensation but no such
warranty was given. The court held the defendant not liable for any repayment on the
grounds of caveat emptor that it was the risk of the plaintiff while purchasing such
goods without warranty and in such cases, cannot claim money back if goods are not
satisfactory.
Another case which cleared the way into doctrine of caveat emptor was ​Laidlaw v.
Organ​.3​ Here in this case Plaintiff Laidlaw sued Organ for failing to disclose a
material fact in the contract.
In the contract defendant Organ purchased 111,000 pound of tobacco from Plaintiff
Laidlaw & company at a fixed price, but because of the longing war between US and
Britain coming to an end on the same day, prices of tobacco increased by 30-50%,
defendant had complete knowledge about the price hike and still chose to keep quiet
about the news, which resulted in financial hit to the plaintiff. On filing the matter in
the Federal district court, the court upheld the defendant not bound to communicate
any such fact as means of intelligence were equally available to both the parties.

1
​ Charles T. LeViness, Caveat Emptor Versus Caveat Venditor, 7 Md. L. Rev. 177 (1943)
​1 POLLOCK AND MULLA,The Indian Contract and Special Relief Act 665-667 (15th edition 2017)
2
​Chandelor v. Lopus (1603) Cro Jac
3
​Laidlaw v. Organ, 15 U.S. 178 (1817)
 FACTORS WHICH LED TO CHANGE IN THE PRINCIPLE
Caveat emptor declined as a principle as it was inclined more towards the seller’s
favour and less in the buyer’s favour, since it was established in the times when
markets required to be industrialised and developed and putting the responsibility on
the seller for the quality of the goods would not have solved the purpose.
Sellers were pounded with very little liability which motivated other sellers to also
join in and which led to industrialisation but it failed after an extent as the consumer
is the ultimate user of the goods and if he's not satisfied he might not buy from that
seller again and that is what happened, consumer started to buy goods with implied
warranty and goods with reliability which compelled sellers to realise worth of the
buyers​4
At the time when it was established it prevailed in a very absolute form and there was
a need for providing protection to the buyers who purchase goods in good faith
i.e.buying in reliance on the skill and judgement of the seller.
It was starting to get clear the idea where buyer and seller should be given equal
importance in terms of the law and moreover later through time the rule of caveat
emptor was considered as detrimental to the development of the commerce and trades
in the markets which must be modified or replaced.

Another compelling reason was found in the case of ​Ward v. Hobbs5​ ​, ​where the seller
sold pigs to the buyer with complete knowledge of the fact that pigs were infected
and sold them through auction and remained silent at the time of trade.
Over the time all the pigs bought by the plaintiff died and also infected some of his
old pigs, when a case was brought in the court it was held that the defendant's mere
silence would not be constructed to misinterpretation, and the seller was held not
liable. In this case even though the defendant having complete knowledge deceived
the buyer. Unfair practices like these do not encourage buyers to engage more in the
trade practices certainly and hence needed to be changed.
Unfair trade practices, unequal rights, burden of responsibility were the causes for a
change in the principle to be done.

In the case of ​National Insurance Company Limited, New Delhi v Krishna Devi W/o
Sudesh Kumar and others6​ ​it was noticed that there was a lack of trust between seller
and buyer, as sellers even having complete knowledge of the defects still chose to
remain quiet leading to deception of the buyers and no liability in the court of law.

4
​Caveat Emptor to Caveat Venditor: A brief History
https://www.mondaq.com/italy/arbitration-dispute-resolution/40206/from-caveat-emptor-to-caveat-venditor--a-brief-history-of-e
nglish-sale-of-goods-law
5
​Ward V Hobbs (1878) AC 13
6
​National Insurance Co. Ltd. vs Krishna Devi & 4 Ors. on 27 February, 2015 (New Delhi)
 That the old concept needed to be changed to a new concept i.e. from Caveat Emptor
to Caveat Venditor as the markets are evolving more towards consumer orientation
and its shift in responsibility is the need of the hour.
Facts of the case were, the insurance company knew about the age of date of birth of
the insured, it was the responsibility of the insurance company to apprise her about
the clause of limited liability under the policy before accepting the proposal and the
premium. Subsequently the insurance company collected premiums higher than the
assured value which is not just unfair practice of the insurance company but also
unethical by a seller of service. The court held Insurance Company was definitely
deficient in rendering service to the Complainant. Finally the court ordered the
insurance company to deposit the disputed money if not withdrawn to be released in
favour of the complainant.

RISE OF THE COUNTER MAXIM ‘CAVEAT VENDITOR’

Caveat Venditor is a maxim which means ‘let the seller beware’, it is a counter to the
pre-existing maxim Caveat emptor which means ‘Let the buyer beware’.
Here ‘Let the seller beware’ can be understood by the fact that the person selling
goods hence seller will be held accountable, responsible for facilitation of the
information to the buyer about the goods.
This concept forces the seller to take the responsibility for the products he’s selling
and discourages him from selling products of unreasonable quality so as to maintain
rights of the buyers.​7

According to the points mentioned above stating the reasons why Caveat Emptor was
widely implemented and and why was it so rigid, the principle suffered a solid blow
by the case of ​Priest v. Last 19038​ where for the first time the court showed trust in
the favour of buyers on the sellers by allowing a buyer to reject the goods and essence
of product liability was to be seen.
Facts of the case were that the buyer bought a hot bottle from the seller who was a
chemist with the implied condition that the goods purchased from him would be
suitable for the purpose but after using the hot bottle for 4-5 times it exploded causing
damage to the buyer’s wife. Buyer after such an incident claimed for breach of
implied condition in the court to which the seller countered that the buyer had not
made known the purpose of purchasing the goods.
Court rejected the seller's counter and held that it is implied that if the buyer asks for
a hot water bottle, then it will be used for the purpose of storing hot water. The Buyer
was entitled to recover expenses from the seller for treatment of her wife as the
product sold by the defendant caused injury.

7
​Charles T. LeViness, Caveat Emptor Versus Caveat Venditor, 7 Md. L. Rev. 177 (1943)
8
​Priest v Last [1903] 2 KB 148
 With witnessing such blower of the rule, this rule started to gain prominence and the
obligation of the seller was shaped up better frame case after case.
Obligation of the seller for reasonable goods was started to be given importance and
the court inclined its importance to buyers also and started to limit the rule of caveat
emptor to reasonable examination.
Some of the cases like milk containing typhoid germs, beer contaminated with arsenic
where examining of the goods and detecting defects in ordinary circumstances could
not be possible were given reasonable examination in court of law while the
development of the maxim Caveat Venditor was in process.

Other than the usual cases of buyers being the one having less knowledge of the
product there were cases in which sellers were the one having less knowledge and
awareness of the product.
This type of situation was witnessed in the case of ​Harlingdon and Leinster
Enterprises Ltd v Christopher Hull Fine Art Ltd9​ ​, where in this case the buyer
purchased a painting from the defendant, seller. It was a painting by German painter
Gabrielle Munter and the defendant was not much aware of the German paintings.
In order to satisfy himself of the purchase the buyer sent the experts to check the
originality/genuineness of the painting. Subsequent to the purchase plaintiff finds out
that the painting was not genuine and was worth less than half of what he paid.
Plaintiff sued for goods of non description​. ​The court on this matter held that by
sending experts to check the genuineness of the painting, the sale was no longer of
description and therefore the plaintiff had no protection in this sale.
Later the decision was opposed by Justice Smith saying that it is the duty of the seller
to be well aware of the conditions and quality of the products selling and making
buyers aware of the same.
After considering all the cases above, the law commission of India came up with its
own test for merchantability quality.
According to the Section 16 (2) of Sale of goods Act 1930,”​Where goods are bought
by description 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”10 ​ ​.
In other words, buyers having full information including the defects of the goods in a
reasonable way buy the goods. So, it is the duty of the seller to inform the buyers of
all the information regarding the products including the defects and information
related to the usage of the product.

9
Harlington & Leinster v Christopher Hull Fine Art [1991] 1 QB 564
10
​Sales of goods Act, 1930, No. 9, Acts of Parliament, 1930 (India)
 And now that India has witnessed the new amendment in ​Consumer protection Act
​ ​, it has widened the scope of consumer protection by adding more duties and
201911
responsibilities on sellers so as to keep buyer’s interest safe and since it has been
more than 30 years since the last act has passed, India has witnessed huge amount of
change in consumer spending, growth of online businesses, e-commerce, so in order
to keep up with the markets, new updates have been added in the old consumer
protection act 1986, some of them are mentioned below -

1. Central Consumer Protection Authority (CCPA): According to section 10(1) of

consumer protection act 2019, regulating authority has been constituted. CCPA
introduced in the act aims to protect the rights of the consumer with the help of
various powers provided.
2. Product Liability: Section 82-87 talks about the new product liability which has
been added in the act in order to protect the interest of the buyers. According to
the Section 83 of the Consumer protection act 2019, an action can be brought up
by the complainant on product manufacturer, product seller, product provider, for
any harm caused to him on account of defective goods. Basis for product liability
action can be Manufacturing defect, design defect, deviation from manufacturing
specifications, not conforming to express warranty, failing to contain adequate
instructions for correct use, service provided faulty, imperfect or deficient.
3. The complainant can now institute a complaint within the territorial jurisdiction of
the Commission where the complainant resides and also that now consumers can
file a complaint against a wrongdoer seller via medium of internet electronically.
4. A group of aggrieved consumers can join hands and file a class action suit to
reduce costs and improve chances of redressal or settlement.
5. All rules of direct selling extended to e-commerce.
6. Settlement of consumer disputes through mediation i.e. with the help of a neutral
intermediary outside the consumer court is encouraged under the new law, thus
saving time and resources of disputing parties which would otherwise have been
spent on dispute resolution through a formal mechanism.
7. Deemed admissibility of complaints if the question of admissibility is not decided
within the specified period of 21 days of the complaint filed.
8. Punishment for sale of adulterated goods has been altered as in case of the first
conviction, a competent court may suspend any licence issued to the person for a
period of up to two years and in case of second or subsequent conviction, may
cancel the licence permanently.

11
​Consumer Protection Act, Amendment 2019, No. 35 of 2019, Acts of Parliament, 2019 ( India)
 CONCLUSION
In the case of ​Rekha Sahu v. UCO Bank & others 201​312 ​ It was held that, when the
rule of caveat emptor prevailed, it was for the purchaser to either verify the title
before purchasing the property or invite complication through litigation. However,
now the rule of caveat emptor is replaced by caveat venditor and when the Bank
Institution put the property on sale, they must show clear title to the said property.

Another classic case of seller’s practice of unqualified goods , ​Ruchika Malhotra v.

Myntra Design Ltd 201813 ​ ​, ​in this case the complainant ordered pair of jeans from
Myntra online website, upon receiving the good, it was found out that the good were
of inferior quality to which she filed in the court, had this been the case during the
rigidity of rule caveat emptor, her case would have been dismissed on the grounds of
rule of ‘buyer beware’ hence Caveat Emptor, but the court ruled in the favour of the
complainant and ordered substantial damages and ordered defendant to pay penalty
and fine.
Another conclusion can be ascertained by saying that if the shift keeps on going, if
the importance keeps on shifting from seller to buyer, there might come a situation
where there would be pro-buyers and who might misuse the powers given to them
under the shield of law.​14
With the starting of the rule of caveat emptor in the starting days and shifting of
responsibilities on the seller in caveat venditor subsequently, the shift was a very
important step due to the conditions of modern trade and commerce and in making
markets more consumer sovereign. With such a change it will help in balancing the
rights and obligations and responsibilities of both buyers and sellers in an open
market.
Even though the consumer is considered to be the kind, the law focuses more on the
protection of rights and duties of both buyers and sellers other than focusing on just
one.

12
​ ekha Sahu v. UCO Bank & others 201 2013-8-78
R
13
​Ruchika Malhotra v. Myntra Design Ltd CC/18/864 2018 (India)
14
​ s. Soumya Christina, Caveat Emptor to Caveat Venditor in progress,(2014) Volume5 Issue 5 2277 – 9809 Print 2348–9359
M
REFERENCES

Books
● 1 POLLOCK AND MULLA,The Indian Contract and Special Relief Act 665-667
(15th edition 2017)
Acts
● Sale of Goods Act, 1893, Act of Parliament of United Kingdom of Great Britain,
1893 (United Kingdom of Great Britain)
● Sales of goods Act, 1930, No. 9, Acts of Parliament, 1930 (India).
● Consumer Protection Act, 1986, Acts of Parliament, 1986 (India).
● Consumer Protection Act, 2019, No. 35 of 2019, Acts of Parliament, 2019 (
India).
Case Laws
● Charles T. LeViness, Caveat Emptor Versus Caveat Venditor, 7 Md. L. Rev. 177
(1943)
● Chandelor v. Lopus (1603) Cro Jac
● Ward V Hobbs (1878) AC 13
● Laidlaw v. Organ, 15 U.S. 178 (1817)
● National Insurance Co. Ltd. vs Krishna Devi & 4 Ors. on 27 February, 2015
(New Delhi)
● Priest v Last [1903] 2 KB 148
● Harlingdon and Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd: CA 15
Dec 1989
● Rekha Sahu v. UCO Bank & others 201 2013-8-78
● Ruchika Malhotra v. Myntra Design Ltd CC/18/864, 2018 (India).

Websites
From Caveat Emptor to Caveat Venditor; What does the new Consumer
Protection Act mean for consumers today?
(2020). Retrieved 13 October 2020, from
https://nickledanddimed.com/2020/08/10/from-caveat-emptor-to-caveat-venditor-wha
t-does-the-new-consumer-protection-act-mean-for-consumers-today/#:~:text=Caveat
%20Venditor%20simply%20means%20%E2%80%9Clet,and%20services%20that%2
0they%20sell
Introduction and importance of consumer protection.
https://www.toppr.com/guides/business-studies/consumer-protection/intro-and-import
ance-of-consumer-protection/
What does the new consumer Protection act mean to consumers ?
https://nickledanddimed.com/2020/08/10/from-caveat-emptor-to-caveat-venditor-wha
t-does-the-new-consumer-protection-act-mean-for-consumers-today/
Evolution of Consumerism in India- Journey from ‘Caveat emptor’ to ‘Caveat
venditor.
https://thelawblog.in/2017/03/19/evolution-of-consumerism-in-india-journey-from-ca
veat-emptor-to-caveat-venditor/
Caveat Emptor or Caveat Venditor: Where are We
Heading?​http://www.legalserviceindia.com/articles/caveat1.htm
Scope of the rule Caveat Emptor.
https://blog.ipleaders.in/exceptions-rule-caveat-emptor/
Caveat emptor to caveat venditor a brief history
https://www.mondaq.com/italy/arbitration-dispute-resolution/40206/from-caveat-emp
tor-to-caveat-venditor--a-brief-history-of-english-sale-of-goods-law
Caveat Venditor legal maxim
https://www.mondaq.com/italy/arbitration-dispute-resolution/40206/from-caveat-emp
tor-to-caveat-venditor--a-brief-history-of-english-sale-of-goods-law
What is Caveat Emptor?
https://corporatefinanceinstitute.com/resources/knowledge/other/caveat-emptor-buye
r-beware/
Key points for consumer protection act 2019.
https://www.drishtiias.com/daily-updates/daily-news-analysis/consumer-protection-a
ct-2019
Overview of the changes in consumer protection act 2019.
https://www.mondaq.com/india/dodd-frank-consumer-protection-act/969026/an-over
view-of-the-changes-to-be-introduced-by-the-consumer-protection-act-2019#_ftn2

*****************