SUBMITTED TO- Dr .

Sangeeta Taak SUBMITTED BY-Philip Oommen

(Assistant Professor of Law) (Roll Number 17121)
INTRODUCTION
 Originated in 20th century with enactment of Sale of Goods
Act 1893.

 Enshrined in the Section 16 of the Sale of Goods Act 1930.

 Exceptions to the Rule are-

1. Fitness for Buyer’s Purpose
2. Merchantable Quality
3. Conditions implied by Trade Usage
4. Fraudulent Method adopted by Seller
FITNESS FOR BUYER’S PURPOSE
 Section 16 (1)
 Requirements-
1. Buyer should make seller aware about the purpose
2. Purchase should be made on basis of seller’s skills
3. Goods must be in the course of seller’s business
 Raghava Menon v. Kuttappan Nair(A.I.R. 1962 Kerala 318)

 Proviso- Trade or Patent Name’s usage

 Baldry v Marshall [1925] 1 KB 260.{Bugatti car case}
MERCHANTABLE QUALITY
 Section 16(2)
 Depends on two factors
1. Marketability
2. Reasonable fitness for general purposes
 Grant v Australian Knitting Mills Ltd (1936 AC 85)
 Proviso- Examining opportunity
 Latent defects- cannot be found(prudent, ordinary skill)
 Patent defects-Easily found
 Thornett and Fehr v Beers and Sons [AIR 1937 Mad. 40]
{vegetable oil case}
 Grant v Australian Knitting Mills Ltd (1936 AC 85)
CONDITIONS IMPLIED BY TRADE USAGE

 Section 16 (3)
 An implied warranty or condition as to the quality or
fitness for the particular purpose may be annexed by
the usage of trade
 Peter Darlington Partners Ltd v Gosho Co Ltd
a contract for the sale of canary seed was held subject
to the custom of the trade that for impurities in the
seed, the buyer would get a rebate on the price, but
would not reject the goods.
EXPRESS TERMS [ SECTION 16(4)]

 Open to the parties to include any express conditions

 Does not negative a warranty or condition implied by
the Act unless the express terms are inconsistent with
the implied conditions.

 Bombay Burmah Trading Corpn Ltd v Aga Mohamed,(1910-11) 38 1A 169.

Sleepers supplied to a railway company were required
to be approved by its experts, it was held that it did not
exclude the implied condition of merchnatableness.
FRAUD OR MISREPRESENTATION BY THE SELLER

 If Seller obtains the consent of the buyer by fraud then

caveat emptor will not apply

 In illustration (a) of Section 19

If a person A tells person B that A’s factory produces
five hundred mounds of indigo annually, intending to
deceive B, and as a result induces B to buy A’s factory,
Then the contract is voidable at the option of B.
CONCLUSION
 Importance is decreasing because of the consumer
protection programs

 The protection of buyer’s interests is paramount

 Powerful Capitalists may misuse the principle

 Middle path must be adopted