A SHIFT from CAVEAT EMPTOR to CAVEAT VENDITOR

The “old rule” of caveat emptor had been superseded by caveat venditor such change being “rendered necessary by the conditions of modern commerce and trade.”  – LORD WRIGHT [1]

Caveat emptor was generally the rule for most purchases and land sales prior to the Industrial Revolution, although sellers have much more responsibility for the integrity of their goods in the present day. Prior to the 18th Century, people consumed lesser goods and usually from local sources or local markets rather than big company and brands, resulting in very few consumer protections.In the twentieth century with the enactment of English Sale of Goods Act, 1893 and later modified by English Sale of Goods Act, 1979 the exceptions to the rule of caveat emptor have become more prominent, famous and were used than the rule itself.

Caveat Emptor was to be certainly disadvantageous to the buyer’s cause, because till then, the aspect of ‘reasonable’ examination was yet to come. Therefore, a scenario wherein a buyer would not have any defence against a seller who has despite being aware of a defect or something which one which cannot detect by reasonable examination which was not informed to the buyer. Another good reason, which can be thought of for the reduction of the rule of caveat emptor, is to provide adequate protection to the buyer who buys the good in good faith, which case laws put as, ‘reliance on the skill and judgment of the seller. And another reason of the complex structure of modern goods, it was only the sellers who could assure the contents and the quality of the goods. For these reasons, it became important to restrict the rule of caveat emptor by grafting a few exceptions upon its scope. There is a responsibility on the seller’s side to deliver appropriate goods and to provide appropriate information about them. Thus, it has led to the birth of ‘caveat venditor’ which means ‘let the seller beware’ in contrast to caveat emptor.

It provident that the Caveat emptor is dying or, so it is going to soon. And this death is believed to be no isolated event, but to exemplify the death of freedom of contract generally. Contracting parties are no longer liberal to set what terms they want, except, particularly, tightly defined market, sellers, can now not abuse their freedom by selling sub-standard goods and relying on exclusion clauses. The benevolent hand of law has replaced the tough rule of the market.

With its origin being traced within the need for disclosure of data for the aim of facilitating the rationale for purchase of the customer, gradually this rule has gained prominence and therefore the obligations of the vendor are given proper shape together with various statutes and case laws limiting the rule of precept to ‘reasonable examination’. Examples like beer contaminated with arsenic, milk-containing typhoid germs are ok to determine that courts are generous enough to exempt the customer from the duty to look at the products where the defects could not be traced in ordinary circumstances. Another important debate that arises that there are cases where, many a times seller himself does not know about the defect. Here the learned scholar on the sale of goods Benjamin has stated that the seller cannot use this justification on himself not being aware or cautious about the defects in goods.

For the reasons stated above, the rule of caveat emptor, as far as judicial precedents go, for the first time suffered a blow by the case of Priest v. Last[2] wherein for the first time, the reliance placed by the seller for the purposes of buying a ‘hot water bottle’ was considered for the purposes of allowing the buyer to reject the goods. This decision was the first traceable decision in common law which gave importance to the reliance placed by the buyer on the seller’s skill and judgment. This proposition of law, however, is a settled principle of law today. The Priest decision, however, was just a beginning of what could certainly be termed as the diminishing process of the rule of caveat emptor. Where in this decision, the purpose was expressly mentioned and then taken into account, the courts in subsequent cases, opined that the need/purpose of the contract would be evident from the nature of the contract or might be known to the seller from the course of negotiations between the parties. Thus express mention of the purpose behind a purchase of goods was no longer considered a requisite for proving reliance on the skill and judgment of the seller, which signified a further shift of law in favour of the buyer.[3] Also the first test which was accepted by the law commission was the statement of Justice Dixon in Australian Knitting Mills v. Grant:
# (the goods) should be in such an actual state that the buyer fully acquainted with the facts and, therefore, knowing that hidden defects existed and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonably sound order and condition and without any special terms.

The second test was the ‘usability test’ by the Law Commission comes from the verdict of Lord Reid in the case of Kendall & Sons v. Lillico & Sons Ltd.

Thus in order to give proper recognition to the relationship between the buyer and the seller and to generate a scenario wherein commercial transactions are encouraged by the means of proper checks , the rule was subsequently diluted

One of the cases, Harlingdon & Leinster Enterprise Ltd v. Christopher Hull Fine Art Ltd[4]  where  the buyer claimed that he had the right to reject the painting as it was not of the original painter. And the buyer was more aware and was an expertise in the given matter then the seller. Here the Benjamin believed when a buyer places a trust on the skills, judgment and knowledge of the seller, seller cannot make an excuse that he was not aware or has knowledge about the same.

Therefore, it is important for a seller to be aware of the conditions of the goods being sole by him and making the buyer aware about the same. And instead of Caveat Emptor it is important to have Caveat Venditor.


[1] http://www.legalserviceindia.com/articles/caveat1.ht.

[2] (1903)2K. B. 148

[3]http://www.legalserviceindia.com/articles/caveat1.htm#:~:text=II.&text=As%20one%20would%20trace%20by,his%20own%20skill%20or%20judgment%20.&text=Buyer’s%20examination%20of%20the%20goods,the%20seller%20to%20provide%20information.

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