Detailed study on the caveat emptor and its exceptions

Caveat Emptor’s doctrine is commonly used in commercial transactions; it is a Latin phrase, which means let the buyer beware. This doctrine puts the responsibility of buying anything on the buyer, and later on, if he/she finds it defective or faulty, he would be responsible for that transaction. According to this, the buyer should be cautious and alert while buying anything, and he is required to inspect and judge any item he/she intends from the vendor. For example, if A buys a car from B and he does not assess the car, and he even does not enquire about the car; subsequently, the car breaks down, in such situation the seller will not be responsible for the defect because, at the time of buying of the car, the buyer did not act vigilantly and failed to inspect the car himself. 

The same is the case with a purchase when a buyer buys an item from an open market, where the vendors keep their things open for preview and inspection, and someone buys an item from the open market after preview and makes the choice of an item. The buyer would be responsible for his choice; the seller would not be responsible for any defect later because the law always favors vigilant people, not the dormant ones. This doctrine’s objection is to make the buyers more cautious and responsible while choosing or buying anything. The buyer is duty-bound to check the quality of the products he purchases. The buyer should inform the vendor about the purpose of buying a specific thing to avoid any mishap and undesirable incident; for example, A buys oranges from B to make juice in his restaurant, the type of oranges were not suitable for juice, later on, the buyer can not blame the seller for selling wrong oranges to him, he is guilty for not explicitly informed the seller about his purpose of purchase. If the vendor misrepresents the facts about the product or provides false information to the buyer, then caveat emptor’s principle shall not apply here. However, the vendor must provide truthful information about any good or product, but he is not obliged to share every information of defect in a product unless he is being asked for by the vendee. If the vendee asks and the vendor misrepresents or hides any defect, he would be liable for fraud and misrepresentation. The responsibility will shift to the vendor. 

 

Exceptions to the doctrine of caveat emptor:

In common law, there are some exceptions to the doctrine of caveat emptor, briefly discussed below.

 

Fitness of product for the vendee’s purpose:

When the vendee intends to buy something and informs the vendor about the nature and purpose of buying that particular product, it is the vendor’s absolute duty to ensure that he is providing the product according to the purpose and desire of the vendee. For example, if a vendee goes to buy shoes for tracking and he informs the vendor about his purpose of buying shoes. Suppose the vendor sells him some ordinary shoes incapable of fulfilling the need and purpose of the vendee. The vendor will be responsible for this, not the vendee.

 

Goods sold by description:

When the vendee purchases any product by going through the description mentioned about that, later on, it turns out to be different from the one for which the vendee purchased it with a specific intention. It is an exception to caveat emptor’s principle so that the vendor will be responsible for the product not matching the description about it.

 

Goods of unmerchantable quality:

When a vendor sells goods by sample or description, he is obliged to sell the goods up to the market level. It should be of merchantable quality if the vendee purchases the goods and finds out that the goods are not of marketable quality. In this case, the vendee will not be responsible, and the vendor will be responsible for the unmerchantable quality of goods he sold to the vendee. If the vendee is provided with the opportunity to examine the goods to ensure their quality, per the description, and he buys it after a complete examination, the vendee will be held responsible for any defect in the goods afterward.

 

Sale by sample:

If a vendee buys goods from a vendor by inspecting a sample from the goods and later the rest of the goods do not match the sample examined by the vendee, the principle of caveat emptor will not apply here. The vendor will be responsible for the defect.

 

Goods purchased under trade/brand name:

When a vendee buys a product by assuming the implied condition or the seller’s warranty about the fitness and quality of the product, but later, the vendor deviates from his warranty or does not disclose any defects in the product, or the product is not in line with description, then he will be held responsible for this act and vendee can claim damages. 

 

Fraud or misrepresentation by vendor:

This is another exception to the doctrine of caveat emptor, where a vendor makes a false statement about the quality and fitness of a product, and on the inquiry of the vendee, he misrepresents the facts about the product and hides the defects from the vendee, he would be liable for fraud and misrepresentation of facts. 

Nowadays, the vendors provide a voluntary warranty guaranteeing their products’ fitness and quality to curtail the applicability of the principle of caveat emptor. They attract more customers, ensuring their quality and satisfying them through warranty. If we compare the rights conferred upon the buyer in Common Law and Islamic Law, both laws aim to protect the buyer’s rights in case of any defect in the purchased goods but with some exceptions. In Common Law and Islamic Law, the principle is used for the benefit of the vendee; it is used as Caveat Emptor (Let the buyer beware) in Common Law; however, in Islamic Law, the term Khiyar al aib (Option of defect) used to protect the buyers in commercial transactions. The general rule is that the vendee should be allowed to satisfy himself about the quality and fitness of anything that he intends to buy. Similarly, the doctrine of the option of defect in Islamic law gives the vendee option to rescind the sale agreement, if he finds any defect in the goods he purchased, due to that defect the market value of that good decreases, he can cancel the sale agreement even after the conclusion of such agreement, but in case if he has purchased the goods after knowing the defect and inspection of the goods. Afterward, he discovers any defect, and the option to rescind the agreement does not remain with him. Islamic Law is different from the Common Law doctrine of caveat emptor. Islamic teachings always discourage the seller from taking advantage of the stupidity and simplicity of the buyer. The seller has more understanding and knowledge of the goods he has; he should be faithful while selling anything to the buyer. He should specifically mention the defects and shortcomings in the goods to the buyer and avoid fraud with him. The Holy Prophet (PBUH) was against fraudulent transactions. Deception is not allowed in Islamic teachings.

In common law, the seller is not bound to disclose all the defects in the goods unless the buyer does not inquire about the defects. If the seller gives full opportunity to the buyer and gives the option of inspection of the goods at the time of sale contract, and the buyer, after inspecting goods, finds it fit and purchases it, then the seller would not be held liable for any future defect in the goods, because the buyer had already exercised his right to inspection of the goods and bought it after getting satisfied. It also allows imposing stipulations in sale transactions like the option of three or seven days to any party to rescind or annul the contract if it finds any defect that was not apparent to both parties at the time of sale transaction. The buyer can cancel the contract by necessary legal steps, and the principle of khiyar al aib will apply here. The modern era has minimized the applicability of the principle of caveat emptor to protect the consumers’ rights because the principle was originated at that time when the goods used to be sold in market and buyer had the opportunity to inspect the quality of the goods, whereas, in this era, the sale transactions mostly happen on online platforms where the buyers do not get chance to inspect the product personally, so there is less option to the buyers to discover any defect at the time of purchasing of such goods. However, he can rely on the description, brand name, and logo of the products only. In some instances, they can replace the defective goods delivered to them by the seller by following specific procedures. Summarizing both Common Law and Islamic Law, we conclude that both doctrines protect buyers’ rights and strive to reduce the practice of fraudulent transactions.