Introduction

Caveat emptor :- It is a Latin term that means “let the buyer beware.” (Similar to the phrase “sold as is”). This term means that the buyer assumes the risk that a product may fail to meet expectations or have defects. In other words, the principle of caveat emptor serves as a warning that buyers have no recourse with the seller if the product does not meet their expectations. The section 16 of The Sale of Goods Act, 1930 adopts this maxim “Caveat emptor”, (“let the buyer beware”) in its first part and then lays down exceptions to that maxim.

Sec 16. Implied conditions as to quality or fitness :

Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:-

(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose:

PROVIDED that, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as its fitness for any particular purpose.

(2) 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;

PROVIDED that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.

(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.

(4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.

This section adopts the English Common Law maxim “Caveat emptor”, (“let the buyer beware”) in its first part and then lays down exceptions to that maxim.

Caveat emptor

It is a Latin term that means “let the buyer beware.” (Similar to the phrase “sold as is”). This term means that the buyer assumes the risk that a product may fail to meet expectations or have defects. In other words, the principle of caveat emptor serves as a warning that buyers have no recourse with the seller if the product does not meet their expectations.

The term is actually part of a longer statement: Caveat emptor, quia ignorare non debuit quod jus alienum emit (“Let a purchaser beware, for he ought not to be ignorant of the nature of the property which he is buying from another party.”) The assumption is that buyers will inspect and otherwise ensure that they are confident with the integrity of the product before completing a transaction.

A more common example is a used bike transaction between two private parties (as opposed to a dealership, in which the sale is subject to an implied warranty). The buyer must take on the responsibility of thoroughly researching and inspecting the bike—perhaps taking it to a mechanic for a closer look—before finalizing the sale. If something comes up after the sale, it is not the seller’s responsibility. 

This section begins with an enunciation of the rule involved in the maxim caveat emptor. It then proceeds to lay down three exceptions to the rule in the sub-sections 1,2, & 3.

In first case (sub-sec 1 & 3), there is an implied condition that the goods are reasonably fit for the purpose for which they are required.

Illustration : (Baretto v. Price) ‘A’ contracts to make and deliver a set of false teeth. The false teeth do not fit in the mouth of B. B is entitled to reject the goods.

Proviso : in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as its fitness for any particular purpose. The buyer in such a case, defines by his order the particular article to be supplied and the contract is performed if the seller supplied that article.

Illustration of proviso :- ‘B’ writes to ‘A’, the owner of a patent invention of cleaning cotton, “send me your patent cotton-cleaning machine to clean the cotton at my factory.” ‘A’ sends the machine according to the order. There is no implied warranty or condition on the part of ‘A’ that the machine is fit for the particular purpose of cleaning the cotton at B’s factory.

In the second case (sub-section 2), there is an implied condition that the goods are of merchantable quality.

The second exception is where :-

1. Goods are brought by description
2. From the seller who deals in goods of that description, whether he be the manufacturer or not.

In cases of this class the goods must not only answer to the description in the contract as required by sec 15, but must also be of merchantable quality, that is, saleable in the market as goods of that description. The buyer, in other words, is entitled to receive a saleable article answering the description in the contract. (Randall v. Newson)

Bristol Tramways Co. v. Fiat Motors Ltd. :- The phrase ‘merchantable quality’ would mean that, the article is of such quality and in such condition that a reasonable man, acting reasonably, would accept it under the circumstances of the case in performance of his offer to buy that article, whether he buys it for his own use or to sell again.

In all other cases the buyer takes the risk as to the quality, condition and fitness of the goods. If he wants to protect himself in such cases, he must do so by an express warranty or condition.

Baldry v. Marshall : An implied condition as to fitness for a particular purpose or as to merchantable quality, may be superadded to express conditions contained in the contract, such as a condition that the car shall be reasonable fit as a touring car.