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Commerce · Ch 21 — The Sale of Goods Act, 1930

Doctrine of Caveat Emptor and Its Exceptions

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Doctrine of Caveat Emptor and Its Exceptions

Caveat Emptor is a Latin maxim meaning "let the buyer beware." It expresses the general rule under the Sale of Goods Act that it is the buyer's own responsibility to examine the goods being bought and satisfy himself that they suit his purpose — the seller is, as a rule, under no automatic duty to point out every defect or unsuitability in the goods, unless the buyer specifically relies on the seller in ways the law recognises. The rule places the risk of an unwise purchase on the buyer, encouraging buyers to inspect goods carefully rather than assume the seller will guarantee everything about them.

However, this general rule has been narrowed considerably over time by a well-established set of exceptions, each of which shifts responsibility back onto the seller:

ExceptionExplanation
Fitness for a particular purposeWhere the buyer discloses the particular purpose for which the goods are required and relies on the seller's skill or judgment, and the seller deals in goods of that description, the seller impliedly guarantees fitness for that purpose.
Sale by descriptionWhere goods are sold by description, they must correspond to that description; if they do not, caveat emptor does not protect the seller.
Sale by sampleWhere goods are sold by sample, the bulk supplied must match the quality of the sample shown; caveat emptor does not excuse a mismatch.
Sale by sample as well as descriptionWhere goods are sold by both sample and description, the bulk must correspond with both — matching the sample alone is not enough.
Merchantable qualityGoods bought by description from a dealer in goods of that description must be of merchantable (reasonably saleable/usable) quality; caveat emptor does not cover a defect that makes goods unfit for ordinary use.
Seller's misrepresentation or fraudWhere the seller actively makes a false representation about the goods, or fraudulently conceals a defect that would not be discoverable on an ordinary examination, caveat emptor does not protect the seller.
Usage of tradeWhere an established custom or usage of a particular trade attaches an implied condition or warranty (e.g. a trade custom guaranteeing a certain quality), that usage can create an exception to caveat emptor for that trade.