Question 3 (b)

Hidden structural defects and caveat emptor

9 marks

Time to write
About 18 minutes
Topic
Conditions, warranties and caveat emptor

Question

Question 3 (b) · 9 marks

Mr. A, purchased specific goods from a seller, Mr. B, and relied on him about its conditions of goods purchased but later on he finds hidden structural defects in the goods purchased. Discuss caveat emptor as a doctrine and, for contracts for sale of specific goods under the Sales of Goods Act, 1930, whether it applies in Mr. A's situation or not.

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

18 minfor 9 marks

Read from the question

  • DiscussEach point named and explained, not just listed.

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Caveat emptor 2 marks 4 min
  3. 2 Exceptions 3 marks 5 min
  4. 3 Application and decision 4 marks 7 min
  5. Check: every ask answered, key terms underlined 1 min

Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks.

Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Rule: caveat emptor. The doctrine means "let the buyer beware". Under section 16 of the Sale of Goods Act, 1930, subject to the Act's provisions there is no implied condition or warranty about the quality of goods or their fitness for any particular purpose sold; the buyer must examine the goods and satisfy himself, and if they turn out unsuitable he cannot hold the seller responsible. Example: A sells pigs to B which, being infected, give typhoid to B's healthy pigs; the seller had no duty to reveal that the pigs were unhealthy.

Picture itHidden structural defects and caveat emptor

1Prakash checks the scooter himself before paying—once it is his, the breakdown is too.

Caveat emptorThe buyer must examine the goods and satisfy himself.

2'It must hold out water,' he tells the paint seller, and lets him choose the tin.

Fitness for buyer's purposeRelies on the seller's skill or judgment.

3He buys rice by the sample packet: the sacks must match it.

Sale by sampleThe bulk must correspond with the sample.

4The potter slides a cloth over the crack while selling—that leak stays his fault.

Fraud or concealment by the sellerWhere the seller makes a false representation, or actively conceals a defect.

Exceptions:

  1. Fitness for buyer's purpose (s. 16(1)): where the buyer tells the seller the particular purpose for which he needs the goods and relies on the seller's skill or judgment, and the seller's business is to supply such goods.
  2. Goods bought under a patent or brand name are excluded from this: then there is no implied condition of fitness.
  3. Sale by description (s. 15): the goods must correspond with the description.
  4. Merchantable quality (s. 16(2)): goods bought by description from a seller who deals in them must be of merchantable quality.
  5. Sale by sample (s. 17): the bulk must correspond with the sample, and be free from any defect, not apparent on reasonable examination of the sample, that would render the goods unmerchantable.
  6. Sale by sample as well as by description (s. 15): the goods must correspond with both; conformity with the sample does not excuse a departure from the description.
  7. Usage of trade (s. 16(3)): an implied condition or warranty as to quality may be annexed by trade usage.
  8. Fraud or concealment by the seller: where the seller makes a false representation, or actively conceals a defect, and the buyer relies on it.

Application. Mr. A bought specific goods from Mr. B and relied on Mr. B as to the condition of the goods. The defects are hidden structural defects, which a reasonable examination would not reveal. Two exceptions may apply, and the facts given do not settle either completely. First, the buyer relied on the seller's skill and judgment, which takes the case within section 16(1) if Mr. A made the purpose known and Mr. B's business is to supply such goods. Second, if the goods were bought by description from a seller who deals in them, they had to be of merchantable quality (s. 16(2)); because the defects are latent, an examination by the buyer does not take the case out of that condition.

Decision. If either exception applies, the doctrine of caveat emptor does not protect Mr. B, and Mr. A has a remedy for breach of the implied condition. If he has not yet accepted the goods, he may reject them and recover the price; once he has accepted them, the breach can be treated only as a breach of warranty, and he may claim damages (s. 13(2)).

Where the 9 marks sit

#ComponentMarks
1Caveat emptor2
2Exceptions3
3Application and decision4
Total9
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