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.
Caveat emptor: qui ignorare non debuit quod jus alienum emit.
A maxim which means:
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-
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.
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
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
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.
Merchantable quality: Where goods are bought by description from a
seller dealing in them, there is an implied condition that goods shall be of
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.
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.
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.
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.
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.
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.
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.
Wallis v. Russel, (1902) 21 R 585.
Bottomley v. Bannister,  1 KB 458; Ward v. Hobbs, 4 App Cas 13.
Phulchand Ram Marwari and Anr. v. Naurangi Lal Marwari, 172 Ind Cas 225.
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]