Caveat emptor is a Latin word and it means buyer beware. This word is mainly used in commercial transactions and the buyer assumes the risk that the product may be defective partially or totally. The present system of transactions in the world market is governed by this rule. The rule has been followed in England for many years now.

Emptor means buyer and the word caveat is taken from the verb cavere which means caution. The principle that governs commercial disputes in the court of law basically means that the buyer at the time of transaction must use his knowledge carefully or accept the cost of inattention.

It is the disclaimer of liability for the buyer’s disappointment. It is one of the settled principles, applying to a purchaser who is bound by actual as well as constructive knowledge of any defect in the thing purchased, which is obvious or which can be found out by proper diligence.

Caveat emptor doesn’t mean that the buyer must take care.[1]
Caveat emptor:
qui ignorare non debuit quod jus alienum emit.

A maxim which means:
Let purchaser beware; who ought not to be ignorant that he is purchasing the rights of another. The general rule with regard to nature and quality of goods for sale is caveat emptor, so that, in absence of fraud, the buyer has no remedy against seller for any defect in the goods not covered by some condition or warranty.

The doctrine of caveat emptor passes the responsibility on the shoulder of the buyer to check, examine and test the goods before purchasing them. The buyer must take due care as a prudent man would while engaging in such purchase of goods or services.

Exceptions to the rule of caveat emptor:

There are total 8 exceptions to this rule-

1. Purchase by description: The rule of caveat emptor doesn’t apply in a case where goods are bought by description from seller. In such a case the implied condition is that the goods shall correspond to the description.
    
2. Purchase by samples: When goods are purchased by sample as well as description and the bulk of goods do not correspond to the description, the buyer has a right to reject the consignment in totality or partially as he thinks fit.
    
3. Fitness for purpose: Where the buyer informs seller that goods are required for a particular purpose and relies upon the skill of the seller, an implied condition arises that goods shall be reasonably fit for the intended purpose.
    
4. Trade name: In case of a contract for sale of a specific article under a patent or trade name, there is no implied condition as to its fitness for any particular purpose.
   
    
5. Merchantable quality: Where goods are bought by description from a seller dealing in them, there is an implied condition that goods shall be of merchantable quality.
6. Usage of trade: Where usage of trade annexes an implied condition or warranty as to the quality or fitness for a particular purpose and seller deviates, the rule of caveat emptor doesn’t apply.
    
7. Sale by sample: In this case the rule of caveat emptor shall not apply if the bulk of goods do not correspond with the sample.
    
8. Consent by fraud or misrepresentation: Where a false statement is made by the seller with an intention to fool the buyer and the buyer relies on it, in such a case also the principle of caveat emptor doesn’t apply.

Judicial pronouncements:

1. Upon sale of goods the general rule with regard to their nature or quality is caveat emptor, so that in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, whether expressed or implied. It is beyond all doubt that, by the general rules of law there is no warranty of quality arising from a bare contract of sale of goods, and that where there has been no fraud, a buyer who has not obtained an express warranty, takes all risk of defect in the goods, unless there are circumstances beyond the mere fact of sale from which a warranty may be implied.[2]
    
2. If a person purchases a property under circumstances in which the principle of caveat emptor applies, he does so at his own risk, and if he suffers loss, he has himself alone to blame.[3]
    
3. As per Advanced Law Lexicon by P. Ramanatha Aiyar, 3rd Edn. 2005 at page 721: Caveat emptor means "Let the purchaser beware." It is one of the settled maxims, applying to a purchaser who is bound by both actual and constructive knowledge of any defect in the thing purchased, which is obvious, or which might have been known by proper diligence.[4]

Conclusion:
Caveat emptor is an acceptable principle of commercial dealings across the globe. This rule is the pivot around which commercial litigation revolves and the rights of the seller and the purchaser are determined. Thus, it becomes an irrevocable condition in any such transaction.

End-Notes:

1. Wallis v. Russel, (1902) 21 R 585.
2. Bottomley v. Bannister, [1932] 1 KB 458; Ward v. Hobbs, 4 App Cas 13.
3. Phulchand Ram Marwari and Anr. v. Naurangi Lal Marwari, 172 Ind Cas 225.
4. Commissioner of Customs (Preventive) v. M/s. Aafloat Textiles (I), Civil Appeal No. 2447 of 2007.

Written By: Syed Aatif, The author is a practicing advocate at Central Administrative Tribunal, Delhi High Court and Supreme Court.
Email: [email protected]

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Importance Of Filing a Caveat in Supreme Court