Rule of Caveat Emptor

Rule of Caveat Emptor

Caveat emptor is a Latin term meaning “let the buyer beware”. It is a general rule of law that a purchaser assumes the risk of his/her purchase. The intent of the rule is to place a duty of care on the buyer in selecting an item and putting forth appropriate inquiry before completing the sale. In this way, a seller is also protected from liability for buyer’s remorse.
A seller is under no duty to reveal unflattered truths about the goods sold and therefore, whenever the buyer buys goods, he must exercise necessary care in his own interest. A buyer, in contract of sale of specific goods, purchases the goods at his own risk as regard as the quality, price of the goods except on the case of fraud or when any condition to that effect is laid down in the contract. A buyer cannot hold the seller responsible and liable if the goods turn out to be defective or do not prove to be useful for the purpose for which they are purchased or if the buyer makes any mistake in assessing the quality of goods purchased. Thus it is for the buyer to ensure himself only at the time only at the time of purchase that goods confirm his own requirements.

A case on this point is Ward Vs Hobbs. In this case a contract of sale gets formed between A and B according to the terms of which A has to sell an animal from his farm to B. Negligently B selects an animal which has been suffering from some sickness. That sickness is characterized by propagation from one animal to the other and the ultimate effect is death of the animal. It should be noted that the sickness is externally visible. B, negligently selects such animal and as a result all animals present in B`s farm comes across death. B sues A. Court decides that B is negligent, he cannot blame the seller for his (A) own negligence and therefore B cannot claim any compensation. Thus cavit emptor rule protects the seller. This rule is unfavorable to buyer.

Exceptions for Caveat Emptor Rule

The shelter of caveat emptor rule is not available to shelter on the following occasions;  When caveat emptor is not applicable buyer can repudiate the contract.

When Sale is need by means of description:  When goods are sold on the basis of description, the delivered goods must be in accordance with description. If it is not so, seller’s fraudulent behavior can be observed and there is no ground to say that buyer is negligent. Then caveat emptor rule is not applicable and buyer can repudiate the contract.

A case on this point is Vorley Vs Whipp. In this case, there is a sale between A and B according to which A has to sell his harvester to B. While selling A gives a lot of description about the machine. There after B comes to know that the delivered machine is not in accordance with given description. B Sues for repudiation of contract of sale. Court decides that as delivered goods are not in accordance with given description, caveat emptor rule is not applicable and hence buyer can repudiate the contract.

When sale is made by means of sample:  When goods are sold on the basis of sample, the delivered goods must be in resemblance with sample. Otherwise seller cannot claim the shelter of caveat emptor rule.

Related case is Wallis Vs Prat. In this case a contract of sale gets formed between A and B according to which A has to supply English sain fain seeds. The contract is based on samples. But A supplies giant sain fain seeds. Court decides that buyer can repudiate the contract of Sale.

When purpose is mentioned:  At the time of purchasing the goods if buyer communicates the purpose for the sake of which he is purchasing the goods seller should sell such goods only which are suitable to that purpose otherwise caveat emptor rule is not applicable.

A case on the point is Priest Vs Laste. In this case, B purchases a bottle from A. At the time of purchasing the bottle the buyer says that it should be qualified for storage of hot water. Thus here purpose is mentioned but the seller sells such a bottle which is not qualified for storage of hot water. As a consequence buyer’s wife gets injured. Court decides that buyer can claim compensation.

When concealment is made:  In case where buyer conceals material facts and thus fraudulently sells goods, then also caveat emptor rule is not applicable.

A case on this point is Smith Vs Green. In this case a contract of sale gets formed between A and B according to which A has to sell an animal to B out of his (A`s) farm. B selects an animal and request’s A to confirm that there is no any sickness to that animal. Actually the animal has been suffering from some sickness and A conceals the fact. There after it comes across death and court decides that B can get the amount back.

When mis-representation is made:  When seller sells the goods by giving mis-representation, he cannot claim the protection of caveat emptor rule. Hence buyer can repudiate the contract. Under first point Vorley Vs Whipp is explained. In the same case mis-representation or wrong description can be seen in connection with Harvester.

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