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.

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. The Doctrine of Caveat Emptor is generally applicable in the case of property transactions but it can also be applied in the sale of goods and other services. 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“. example. The seller makes the goods available in the market and it is the responsibility of the buyer to inspect them well before buying. If the buyer later discovers a defect in the goods that could have been detected earlier by him, he cannot sue the seller for inferior quality.

Though the responsibility lies with the buyer, he can shift it to the seller under the given conditions:

1. If the buyer has informed the seller about the purpose of the purchase, before making the purchase.

2. If the buyer relies on the technical expertise and experience of the seller.

3. If the goods are of a description that the seller supplies in his normal course of business.

Exceptions to the Doctrine of Caveat Emptor

The Doctrine of Caveat Emptor and its exceptions will help us understand the situations in which the responsibility is not put only on the buyer.

1. Fitness of the Product for the Buyer’s Purpose of Purchase- Section 16 (1)

If the buyer informs the seller about his purpose behind purchasing the goods and the seller does not sell the goods according to that knowingly, it relieves the buyer from the responsibility. In this case, it becomes the duty of the seller to supply the right goods to the buyer. For example, A informs B, who is a shoe seller, that he wishes to purchase shoes for running. If B still sells him shoes that are not for running, then B can be held responsible.

2. Sale of Goods Under the Trade Name:

 If the buyer purchases a branded product or a product sold under a trading name, then he is assured of the quality that is associated with that brand name. The seller in this case cannot be held responsible. In this case, the buyer is not relying on the skill or judgment of the seller but on the implied quality standard that the brand offers. 

3. Goods Sold by Description:

If the buyer purchases the goods based on their description which matches the product, then the seller cannot be held liable. The seller will be held liable only if he provides an incorrect description of the goods.

4. Merchantable Quality of Goods- Section 16(2):

The seller must provide goods of merchantable quality to the buyer. This means that the goods must be fit for resale in the market and must pass the market standards. When the buyer purchases the goods from a seller based on a description and the seller deals in the goods of that description, then the goods must be of merchantable quality. If the goods are not of merchantable quality, then the seller can be held liable for the same.

5. Sale by Sample Inspection:

The Doctrine of Caveat Emptor does not apply if the buyer purchases the goods after careful inspection of a sample of the goods that he intends to buy and the seller supplies goods different from that sample. For example, A inspects a sample carpet manufactured by B. He gives an order of 100 carpets of the same quality as that of the sample. If B supplies carpets that do not match the sample carpet in quality, then he will be held liable. If the sale is made based on a description as well as a sample and the goods do not match both, then the buyer is not held responsible. 

6. Sale by Description and Sample

If the sale is done via a sample as well as a description of the product, the buyer will not be responsible if the goods do not resemble the sample and/or the description. Then the responsibility will fall squarely on the seller.

7. Usage of Trade

There is an implied condition or warranty about the quality or the fitness of goods/products. But if a seller deviated from this then the rules of caveat emptor cease to apply. For example, A bought goods from B in an auction of the contents of a ship. But B did not inform A the contents were sea damaged, and so the rules of the doctrine will not apply here.

8. Fraud or Misrepresentation by the Seller

This is another important exception. If the seller obtains the consent of the buyer by fraud then caveat emptor will not apply. Also if the seller conceals any material defects of the goods which are later discovered on closer examination then again the buyer will not be responsible. In both cases, the seller will be the guilty party.