Meaning:

The Latin phrase ‘Caveat Emptor’ means let the buyer beware. The doctrine of
Caveat Emptor under the Sale of Goods Act talks about the onus of the buyer in
ascertaining the risks in a contract.
Introduction:
The Doctrine of Caveat Emptor means that the responsibility lies on the buyer
of goods and he must perform due diligence before the purchase of the goods. It
is expected from the buyer to be alert in a contract of sale. He cannot hold the
seller responsible for inferior goods unless the contact is based on fraud.

Section 16 of the Sale of Goods Act, defines it as ‘“there is no implied warranty

or condition as to the quality or the fitness for any particular purpose of goods
supplied under such a contract of sale.

The doctrine attempts to make the buyer more conscious of his choices. It is the
duty of the buyer to check the quality and the usefulness of the product he
is purchasing. If the product turns out to be defective or does not live up to its
potential the seller will not be responsible for this.

Example. A bought a horse from B. A wanted to enter the horse in a race.

Turns out the horse was not capable of running a race on account of being lame.
But A did not inform B of his intentions. So, B will not be responsible for the
defects of the horse. The Doctrine of Caveat Emptor will apply.
However, the buyer can shift the responsibility to the seller if the three following
conditions are fulfilled.

 if the buyer shares with the seller his purpose for the purchase
 the buyer relies on the knowledge and/or technical expertise of the
seller
 and the seller sells such goods

The fundamental idea behind the rule of Caveat Emptor is that once a person
has made himself satisfied with a particular product that he purchased; he
should not have the right to go ahead and reject them later. One of its main
objectives is also to make the buyer more aware. When a person knows that he
would not get relief later if the goods turn out to be defective then it increases
his awareness and he chooses to be extra cautious while purchasing. That in turn
reduces the amount of litigation in the courts.

The rule of Caveat Emptor is seen under Sec 16 of the Sale of Goods Act, 1930.
It states

"Subject to the provisions of this act or any other law for the time being in force
there is no implied warranty or condition as to quality or fitness for any
particular purpose of goods supplied under a contract of sale"

Significanceof Caveat Emptor

In the leading case of Ward v Hobbes the House of Lords held that a vendor
cannot be expected to use artifice or disguise to conceal the defects in the
product sold, since that would amount to fraud on the vendee; yet the doctrine
of caveat emptor does not impose duty on vendor to disclose each and every
defect in the product. The caveat emptor imposes such obligation on vendee to
use care and skill while purchasing such product.

Exceptions to the rule of Caveat Emptor:

Fitness of the Product for the Buyer’s Purpose of Purchase- Section 16 (1)
Sec 16(1) talks about a situation where the buyer has either expressly or
impliedly told the seller that he relies on his skills and judgements for a good
that the seller deals in his ordinary course of business, then there is an implied
condition that the goods shall reasonably be in accordance with the said
purpose.

The following essentials has to be fulfilled for this. Firstly, the buyer must make
the seller aware for the purpose for which he is asking for the good. The buyer
must rely on the seller's judgement and skill. Lastly, the goods must be of the
description that the seller deals in.
In the leading case of Shital Kumar Saini v Satvir Singh the plaintiff had
purchased a compressor on one-year warranty. It showed defect in 3 months. It
was replaced by another but no warranty was provided on this. The court
allowed it to be rejected on the ground that the goods should have been
reasonably fir for the purpose for which they are sold.

Sec 16(2) talks about merchantable quality which is one more exception. It
talks about the fact that the seller who sells goods by description has a duty to
ensure that those goods are of proper merchantable quality i.e. if they are resold
then they should be in a position to be passed of under the same market
description. This however is subject to the condition that the buyer did not have
reasonable opportunity to examine the goods. If he did then this would not
apply.

Sec 16(3) provides for an exception where the conditions are implied by the
usage of this particular trade. So, in a case there is an implied warranty with
regards to the fitness and quality of the goods and seller doesn't abide by that
then in that case, the seller would be liable.

In a case, where an order has been in bulk and the buyer checks only a small
sample and then if the bulk doesn't coincide with the sample, then the buyer
won't be held responsible. For example- if one person orders a particular type of
a notebook in a huge quantity and checks only one, and the others come out to
be different then this doctrine won't be applicable.

The final exception to this rule applies to the scenario when the seller has
obtained the consent of the buyer by fraud or misrepresentation then this
doctrine would not apply. Moreover, if the seller willingly conceals any
material defects which the buyer later comes to know about then also the buyer
won't be liable.
Hence, we see what this doctrine of Caveat Emptor means. It aims at creating
an awareness among the buyers to be careful in choosing what they buy. At the
same time, it tells the sellers that if they cheat by any means then they would
face the repercussions. For this, The Consumer Protection Act 2019 is firmly in
place.