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Implied Conditions And Warranties: Caveat Emptor

Bhawna Rattan
26 May 2020 9:51 AM GMT
Implied Conditions And Warranties: Caveat Emptor
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INTRODUCTION

Contract is a transaction between the parties wherein they decide themselves the various terms or stipulations to be added or substracted from the contract. Thus similarly for the transaction qua goods among the parties which is governed by the Sale of Goods Act, 1930 (hereinafter referred as act) , they decide the various terms or stipulations to be agreed and acted upon. Such terms or stipulations may be essential or mere collateral i.e. not essential to be performed for the full and final performance of the contract. In legal terminology such terms or stipulations as per their nature can be termed as either "condition" or "warranty." Both these terms are defined under the act. 'Condition' is a stipulation essential to the main purpose of the contract and 'warranty' is a stipulation collateral to the main purpose of the contract. However the breach of both leads to different consequences. On breach of condition, the aggrieved party has an option to repudiate the contract and claim damages while on the other hand, on breach of the warranty the aggrieved party can only make a claim of compensation against such breach and has no right to repudiate the contract. But in certain circumstances giving due leverage to the party in fault, the aggrieved has an option to treat the breach of condition as breach of warranty and thus the subsequent events follow differently nonetheless in actual the breach of condition has took place.

Further where the parties has an option to put conditions and warranties in their contract, there are certain conditions and warranties which are provided in the act itself and are called "implied conditions and warranties." Such implied conditions and warranties are implied in every contract unless they are inconsistent with the express conditions and warranties of the contract made by the party. But in all other contract of sale of goods they are to be found impliedly i.e. by virtue of their presence in the act itself.

DISCUSSION

Conditions and warranties given in the act are called implied conditions and warranties and thus they are implied in every contract of sale of goods unless they are inconsistent with the express conditions and warranties. Such implied conditions and warranties are as follows:

  • IMPLIED CONDITION AS TO TITLE : It means that in case of sale of goods, the seller has right to sell the goods and in the case of agreement to sell, he will have right to sell the goods[1].
  • IMPLIED CONDITION IN CASE OF SALE BY DESCRIPTION : It means when the sale is by description, the goods shall correspond with the description[2].
  • IMPLIED CONDITION IN CASE OF SALE BY SAMPLE AS WELL AS DESCRIPTION : It means when the sale is by sample as well as by description then the bulk of goods shall correspond with both sample and description as well and it is not sufficient if they do not correspond with the either.[3]
  • IMPLIED CONDITION IN SALE BY SAMPLE : It means in the case of sale by sample the following are the implied conditions:
  • Bulk shall correspond with sample in quality
  • Buyer shall have reasonable opportunity of comparing bulk with sample
  • Goods shall be free from any defect rendering them un merchantable which would not be apparent on reasonable examination of the sample.[4]
  • IMPLIED WARRANTY AS TO QUIET POSSESSION : It means in a contract of sale there is implied warranty that the buyer shall have and enjoy quiet possession of the goods and thus buyer's possession shall not be disturbed. If the possession of the buyer is disturbed then that amounts to the breach of warranty under the act.[5]
  • IMPLIED WARRANTY AGAINST ENCUMBRANCES : It means the buyer shall hold goods free from any charge or encumbrance in favor of any third party. In case there is any charge or encumbrance on the goods is found by the buyer or he is has to discharge the same then it amounts to the breach of warranty. [6]

No other implied condition is provided in the contract for sale of goods, however there are certain exception to the rule of caveat emptor which has been accorded the status of implied conditions in the contract of sale of goods. Before mentioning those implied conditions let's understand the concept of CAVEAT EMPTOR.

DOCTRINE OF CAVEAT EMPTOR

The term "caveat emptor" is latin for "let the buyer beware." It is short for "caveat emptor quia ignorare non debuit quod us alienum emit" which means "let a purchaser beware for he ought not to be ignorant of the nature of the property which he is buying from another party." Thus the doctrine can be traced in the act wherein it has been laid down, that there is no implied condition or warranty as to the quality or fitness for any particular purpose of goods.[7] It simply provides that buyer is best judge of his own interest. The goods/product and the purpose for which it has to be bought is well known to the buyer and thus before buying the goods he is required to check its useability for his purpose and if subsequent to the sale of goods, the goods does not suit the purpose or found unfit to the buyer for his purpose then seller is not liable for the same and the buyer has no right or remedy vested in him against such fallacy.

ORIGIN OF DOCTRINE OF CAVEAT EMPTOR

The doctrine of "caveat emptor" is a part of law of contract. It was originated in the common law which imposes the liability on the buyer that if he has to buy the goods then he has to beware of the product he is buying and once he has thoroughly examined the goods and bought them, later he cannot take the refuge under the clause that goods does not suit his purpose. He was bound to take care of his own interest and the seller was under no obligation to check if the goods sold suits the purpose of the buyer or not.

The same doctrine of "caveat emptor" was imported into our piece of legislation, used to govern the sale of goods i.e. sale of goods act, 1930 and therefore it finds mention in the act and has been expressly laid down, there is no implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied under a contract of sales. [8]The term 'particular purpose' means the purpose for which the buyer has bought the goods. The purpose can be categorized as general or particular; general means, commonly or generally the goods are used for, by all and sundry. While the particular purpose means the use which is to be made by any particular buyer only. Therefore nonetheless the purpose to which the goods are put to use the seller is not held responsible if the goods failed to fulfill the purpose and the buyer before he buys the goods himself has to check for the goods and its suitability for his purpose. Thus this is what imbibed under the doctrine of "caveat emptor quia ignorare non debuit quod jus alienum emit."

However the act has put some flexibility in the rigid rule/doctrine of caveat emptor by appending some exceptions to this general principle of "let buyer beware." Those exceptions are as follows :

  • Buyer makes known to the seller the particular purpose for which the goods are required and the buyer relies on the seller's skill and judgment. Further goods are of description which are in the course of the seller's business to supply.[9]
  • Goods in case of sale by description and seller deals in goods of that description then, the goods shall be of merchantable quality[10].

These exceptions thus has been made the implied conditions in the contract for sale of goods, which vested the same rights in the buyer in case of its breach and further has negated the doctrine of caveat emptor to some extent and the duty is impose on the seller in case of selling the goods to the buyer and in such circumstances the seller has to be aware i.e. the concept of "caveat venditor" has been embraced to certain extent under the present legislation.

RELEVANCY OF DOCTRINE OF CAVEAT EMPTOR VIS A VIS PRESENT DAY COMMERCIAL TRANSACTIONS

  • Doctrine under Sale of Goods Act,1930 (hereinafter referred as act) : Section 16 of the act that there is no implied condition or warranty as to the quality or fitness for any particular purpose of goods. Thus it has incorporated the doctrine of "caveat emptor" in the transcation involving the sale of goods. But however this is just a general rule and the act has also expressed certain exceptions to this general rule which has bring into vogue the new doctrine of "caveat venditor" i.e. 'seller beware.'
  • Guarantee or Warranty clause – Whether inimical to "caveat emptor" : Today when we have era of commercial globalization the competition among the business market has stretched to the infinite limits and thus in the neck to neck race of maximizing profits and earning the most, the doctrine's relevance has lost its shine. These days buyer has been placed on the higher pedestal comparative to his position in the earlier times when the commercial world was in his infancy. The goods are sold now with the guarantee or warranty clause in the contract of sale of goods. 'Guarantee' is generally given when the seller of goods undertakes to replace the goods if any fault/glitch/shortcoming comes in the product and 'warranty' is assured to the customer or buyer of goods that certain services should be provided in case the goods fails to run smooth race. Thus though we may find place of the doctrine that before buying the goods 'buyer should be aware' yet seller has also owe responsibility towards the buyer that in case of any fault of the product or it does not fits the suitability of the buyer then he will take the pain to satisfy his customer and the buyer thus now no more feel negligible in the era of commercialization.
  • Enactment of Consumer Protection Act – Whether incorporated the doctrine of "caveat venditor." : The Consumer Protection Act (hereafter refereed as act) was enacted to protect the interests of the consumers in India. The act has provided many provisions which has been laid down on the lines of "caveat venditor" i.e 'seller beware.' Provisions are as follows :
  • The general rule as to the claim for compensation under the product liability action by a complainant (consumer/buyer) for any harm caused by a defective product manufactured by a product manufacturer or serviced by a product service provider or sold by a product seller[11].
  • It has been provided further, the product manufacturer shall be liable in a product liability action in the following cases:
  • Product contains manufacturing defect;
  • Product is defective in design;
  • There is deviation from manufacturing specifications;
  • Product does not conform to express warranty;
  • Product fails to contain adequate instructions of correct usage to prevent any harm or any warranty regarding improper or incorrect usage.

However the most notable feature is product manufacturer shall be liable in a product liability action even if he proves that he was not negligent or fraudulent in making the express warranty of a product[12].

  • Also under the act, product service provider shall also be made liable in a product liability action in the following circumstances :
  • If the service provided was faulty or imperfect or deficient or inadequate in quality, nature or manner of performance which is required to be provided by or under any law for time being in force or pursuant to any contract;
  • If any act of commission or omission or negligence or conscious withholding any information which has caused harm;
  • The service provider did not issue adequate instruction or warnings to prevent any harm;
  • The service did not conform to express warranty or the terms and conditions of the contract[13].
  • Product seller who in case is not a product manufacturer shall also be made liable in a product liability action if:
  • He has exercised substantial control over the designing, testing, manufacturing, packaging or labeling of a product that caused harm;
  • Has altered or modified the product and such alteration or modification was the substantial factor in causing harm;
  • Has made a express warranty of a product independent of any express warranty made by a manufacturer and such product failed to conform to the express warranty made by the product seller which cause the harm;
  • Product has been sold by him and the identity of product manufacturer of such product is not known, or if known the service of notice or process or warrant cannot be effected on him or he is not subject to the law which is in force in India or the order, if any passed or to be passed cannot be enforced against him[14].

Thus all the provisions of the act has brought the concept of "caveat venditor" i.e. 'seller be aware' and if the case falls under any of the above provisions then the seller should be held responsible for the same, though the doctrine of caveat emptor may have played its part at the time of contract of sale but still the new concept have emerged.

  • Implied conditions and warranties – Whether in contrast to doctrine of "caveat emptor" : The concept of implied conditions and warranties in the sale of goods act, 1930 is analogous to the concept of "caveat venditor" or in other words in contrast to "caveat emptor." Thus implied conditions and warranties provided in the act has been laid down in order to serve the best interests of the buyer who may have did the transaction in good faith and thus the law comes to the rescue of such buyer who otherwise has been vigilant in his transaction.

CRITICAL ANALYSIS

The concept of implied conditions and warranties and the doctrine of caveat emptor, they are to some extent in contrast with each other wherein if the buyer has been in good faith and remain vigilant of his duty of be aware has did the transaction but has not been able to save his interest qua the goods sold to him, then the law has vested certain right/remedy in him against such breach and thus the seller can be held responsible and has to face the consequences for the same. Although the doctrine finds its place in the Sale of Goods Act,1930 yet it has also provided with exceptions which negatives the concept of caveat emptor. Thus it shows, the law may have retained the concept of caveat emptor but from the perusal of various enactments it has been revealed that law leans in the favor of the buyer, embracing the new concept of seller be aware.

SUGGESTIONS

The provisions are expressed very nicely in the statute book qua both the doctrines, caveat emptor i.e. buyer be aware and caveat venditor i.e. seller be aware, by the legislature, weighing both of them on the golden scales, has took into consideration the various scenarios of the present era and further showed its keenness to save the interests of both the buyer and seller and maintained healthy relation and less prone to disturbance equilibrium between them. Thus any party in the transaction has to play its own part well in order to be on the safer side of law and till the time the law is changed, the letter of the law is supreme and should be followed in spirit.

CONCLUSION

Thus on the closing note, it can be said that with the enactment of various legislations and the consumer oriented approach of the business elites, the buyer is no more a 'small fry' but much favored and worshipped, as his satisfaction will ultimately satiates many.

THE DAWN OF "CUSTOMER'S SATISFACTION IS OUR MOTTO" HAS ARRIVED.

Views Are Personal Only.


BIBLIOGRAPHY

Sale of Goods Act by Dr R.K. Bangia

Sale of Goods Act, 1930

https://en.wikipedia.org/wiki/Caveat_emptor

http://www.legalserviceindia.com/articles/caveat1.htm



[1] Section 14(a)

[2] Section 15

[3] Ibid

[4] Section 17

[5] Section 14(b)

[6] Section 14(c)

[7] Section 16

[8] Ibid

[9] Section 16(1)

[10] Section 16(2)

[11] Section 82

[12] Section 84

[13] Section 85

[14] Section 86

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