Evolution of Caveat Emptor and Caveat Venditor
Caveat emptor and caveat venditor both are the Latin terms the meaning of which are “let the buyer beware” and “let the seller beware.” While the term is often used as a famous saying in English, it is used as a form of cautionary note in contractual agreements. The contract law basic concept in several jurisdictions puts the onus on the purchaser and seller to undertake due diligence before making a buying. The principles of Caveat emptor and Caveat venditor have been an important part of the law relating to the sale of goods and services, where a transaction between a buyer and a seller is common, on the basis of certain determinants, like profit and loss, quality and fitness of the goods, description of the service, et cetera. Caveat emptor being the one to have been protective of the sellers, gradually started evolving and prioritising the buyers, as the judiciary started evolving with time, thereby developing the principle of caveat venditor that prioritised the interest of the buyers.
Since the implementation of the Sale of Goods Act 1979 (amended the 1893 Act) which brought forward certain types of implied terms that makes the final consideration for the merchantability of the goods, it called for the removal of the principle of Caveat Emptor. Rather, the protection of the buyers through implied terms was started with the Act of 1893, where the implied terms in relation to simple contract was extended to contract for sale of specific as well as unascertained goods. Before implementing the 1979 Act, in the case of Ashington Piggeries Ltd. and Another Appelants v. Cristopher Hill, the main legal issue was to determine whether the defendant could be held responsible for breaching a contract with the plaintiff concerning delivery of some kind of animal food which was for mink nutrition in specific. In this case, Lord Willberforce held that where a contract between the buyer and seller was entirely based on a specific animal food that was specifically for mink nutrition, then in that that case it was expected of the seller to prioritise the specification mentioned by the buyer at the time of placing the order or entering into the contract. Thus, it was imperative to perform the contract as per the pre-agreed description of the goods to be supplied, and not something that the seller generally does. Thus, it was decided that the seller had breached the contract by violating the agreed description of the goods to be delivered. Lord Diplock, in the same case, had held that the decision was too close to the new principle of caveat venditor and it needed a balance.
The subsequently added and implemented implied terms set out in the 1979 Act prioritised three different aspects, ensuring that the interest of the buyer must be adhered to, thereby requiring the goods to be fit as per the buyer’s expectation. A more accurate description of the goods will make sure a better protection for the buyer; it is where the application of section 14 comes into the picture for further ensuring the quality and fitness of the goods along with the accurate description. Section 14 of the Act of 1979 states that when a seller sells a goods, it is expected that it would be of satisfactory quality, which suggests a standard which must be satisfactory to any reasonable man, involving the price, description and other relevant factors. Further, the ‘quality of goods’ includes the condition of the following aspects of the goods, like: fitness of the goods for fulfilling the purpose for which it was purchased, the appearance and finish of the product, free of minor defects, durability and safety. The seller would not be held liable for the fitness of the goods where the particular quality and fitness was brought to the buyer’s notice before the contract was entered into, or where the buyer had examined the goods before such contract was entered into. Hence, it is clear that the implementation of the amended Sale of Goods Act pushed the application of the principle of caveat venditor more than ever.
Sale of Goods Act 1979 and Implied Terms
In Slater v. Finning Ltd, Lord Steyn had however, observed that the application of the new principle that prioritised the interest of the buyer and asked the sellers to be beware of their conduct was going too far. He held that imposing strict liability upon the seller seems too harsh, especially when the seller had taken all the precaution to meet the buyer’s expectation or had no idea about the buyer’s choice and that it would affect his trade. In this regard, it could be argued that the principle of caveat venditor could have an extensive interpretation which would give more confidence to the buyers in order to bring a claim against the seller in regard to the flaws in quality and fitness of the goods.
Further, in determining the application of the principle of caveat venditor in regard to the contract of sale, the case of Stevenson v. Rogers is often referred to. The quality of a boat was put up for questioning where the buyer had sued the seller for breach of contract in violation of section 14(2) of the 1979 Act. It was subsequently held that as Mr Stevenson was not a businessman who sold boats on a regular basis, thus it could not be expected of him to maintain the quality of the boat and ensure that it was as per the expectation of the buyer. However, in appeal, the Court of Appeal had overruled the initial order holding the view that a seller could be held liable for not meeting the expectation of the buyer irrespective of the nature of his business, whether he traded regularly or never. If one has sold a product or service, it is his responsibility to make that the product is of such quality which is fit for the purpose for which he had made the purchase. It thus prioritised the benefit of the buyers, asking the sellers to act responsible in terms of selling goods to their customers, thereby ensuring that such goods are fit for the use of the purchaser, even though no particular time frame is set till which the seller shall be held liable for the quality of the goods.
However, researchers and jurists based on recent precedents, have suggested that the application of the principle of caveat venditor is becoming too harsh and the buyers are often unreasonably protected without having to bear any kind of risk while doing business. The idea of ‘risk and bad luck’ in the course of trade and commerce is almost fading away, which is not at all accepted from the point of view of a seller, who is vested with enormous risks, on the contrary.
Therefore, it could be concluded that a balance between the two principles is absolutely necessary where the circumstance of the case would be evaluated before siding with either of the caveats. The caveat emptor standard is gradually fading and being replaced by the consequent caveat venditor standard, with the advancements being attributed to a more consumer-oriented market in which business dealings are being energised. The position and conduct of the parties are determined by the court before holding either one of them responsible for the other’s loss. However, it should be noted that if this line of advancement is taken too far, scholars may end up recording transaction records as a result of the methodology then turning out to be extremely favourable to buyers who may misuse the legal protection.
Section 14 of the Sale of Goods Act 1979
To determine whether Sophia could bring a claim against Matthew for deceiving her in regard to the quality and fitness of the car.
Section 2 of the Sale of Goods Act 1979 lays down the provision for ‘contract of sale’ of goods which states that the seller transfers the goods to the buyer in exchange of a consideration which is known as the price. Such contract could be absolute or conditional. It could be made orally or in writing, or partly orally and partly in writing or even implied as per the ‘conduct of the parties’.
Section 14 of the Act of 1979 states that when a seller sells a goods, it is expected that it would be of satisfactory quality, which suggests a standard which must be satisfactory to any reasonable man, involving the price, description and other relevant factors. Further, the ‘quality of goods’ includes the condition of the following aspects of the goods, like: fitness of the goods for fulfilling the purpose for which it was purchased, the appearance and finish of the product, free of minor defects, durability and safety. The seller would not be held liable for the fitness of the goods where the particular quality and fitness was brought to the buyer’s notice before the contract was entered into, or where the buyer had examined the goods before such contract was entered into. An implied term pertaining to the fitness of the goods may be added to the contract of sale as held under section 14(4) of the Act; nevertheless, it is reasonably expected that the seller, like any reasonable man, would respect and adhere to the purpose for which the buyer is making the purchase, thereby deliver goods that are fit for the buyer’s use. Thus, where the buyer has specifically laid down his specification in regard to the goods that he is purchasing or ought to purchase, such specification makes the seller liable to carry out the trade respecting the buyer’s wish. Contravention of such wish or request would certainly amount to a breach of contract of sale, making the buyer entitled to seek remedy, which would be in the form of repair, replace or refund.
Section 27 of the Act lays down the duty of the buyer and seller in respect to a contract of sale, which is to deliver the goods on the part of the seller, while accepting and making the payment on the part of the buyer, both as per the terms of the contract of sale.
Section 51 to 54 of the Act of 1979 lays down the remedies that are available with the buyer, who is a consumer, in respect to the defect or damage to a goods, for which the seller is to be held liable.
Section 10 of the Consumer Rights Act 2015 directs that the consumer’s interest or purpose for buying the goods must be complied with. The goods so supplied must be, therefore, fit for the purpose for which they were purchased, as otherwise, it would amount to a breach of such contract of sale. This provision directs the seller or trader to ensure that the goods so sold are ‘fit for the particular purpose’ for which it is bought, hence prioritising the best intertest of the buyer and suggesting to hold the seller responsible if such fitness is not ensured. The fitness of the goods could either be specified with the contract of sale, could be reasonable to be assumed or as a matter of common sense that if the fitness and quality is not respected, then in that case, the seller or trader would be held responsible for failing to carry out the necessary order that was existing with the contract. A breach of contract of sale has been indicated by the Act in the course of exercising the buyer or consumer’s right to receive the right product or goods, fit for the purpose for which it was purchased.
Application of Caveat Venditor in Recent Precedents
Section 19 of the Consumer Rights Act empowers the consumers to enforce their rights in respect to the terms of the goods and the contract of sale. This provision asks the trader to comply with the promises that they had made to the consumers in respect to the description, quality and fitness, and price of the goods; the three implied terms. In case the trader breaches his duty towards the consumers, it then gives rise to claiming remedy, which are in the form of monetary compensation, specific performance, specific implement, “relying on the breach against the claim for the price by the trader”, and a “right to treat the contract at an end”.
In this case, Sophia entered into a successful contract of sale with Matthew as per legal provisions, meeting the necessary requisite of creating a contract for a price. Sophia, while purchasing the car, expressed her concern and purpose for which she was investing in the one that Matthew was selling. Based on Mathew’s promises about the specification of the car, it was reasonable for Sophie to believe him and complete the purchasing process by making the full payment, only to find that the car was not only irreparable, but also the fact that she was duped by Matthews. Here, it is clear that Mathew had rigged the actual mileage of the car, showing that it had only run for 82,320 kilometres, while it is 155,200 in real. This clearly indicates a deceptive conduct on the part of the seller, thus amounting to a breach on his part as well.
The car was turned out to be defective beyond repair as shown in the case study subsequently, which Sophie finds out after hopping from one garage to another, getting to know that it was uneconomical to repair the car. While, Matthew had spoken high words about the condition of the car, that it was in good shape and condition, that Sophie would “love it”. On inspection, when it was found that the car was flagged as “Category N”, Matthew lied to Sophie that it was only flagged as Category N for having being involved in a few accidents, and not for any other reason. It therefore, purports that Sophie was deceived in terms of the contract of sale of the car by Matthew.
Sophie, making her purpose of buying the car clear to Matthew, expected that she would be delivered a car that was fit for her usage, but on the contrary, she was given a product that she could be make use of. Thus, it indicates a severe breach of contract of sale, calling for remedy from Sophie’s end. As the car is beyond repair, she could either seek for a replacement or a refund of the payment that she made to Matthew as the price for the Hyundai Tucson.
Conclusion
Therefore, Sophie could bring a claim against Matthew for deceiving her to purchase a defective car, thereby breaching the contract of sale, which required him to deliver a car that would be fit for the purpose for which she intended to but the car. Sophie could therefore, sue Matthew for monetary compensation or damages.
Ashington Piggeries Ltd. and Another Appelants v. Cristopher Hill [1972] A.C. 411 pp. 508-509
Slater v Finning Ltd [1996] 2 Lloyd’s Rep 353
Stevenson v. Rogers [1999] Q.B. 1028
Statute
Consumer Rights Act 2015
Sale of Goods Act 1893
Sale of Goods Act 1979
Book and Journal Article
Andrews, Neil H. “Breach of Contract: A Plea for Clarity and Discipline.” (2018).
Austen-Baker, Richard. Implied terms in English contract law. Edward Elgar Publishing, 2017.
Beheshti, Reza. “The circular economy and the implied terms of contract in English sales law.” Journal of Property, Planning and Environmental Law (2020).
Breman, Joel G. “Eliminating poor quality medicines:‘Caveat emptor, Caveat venditor’(buyer beware, seller beware).” (2018) International health 10.5: 321-323.
Macgregor, Laura. “Remedies for breach of contract in Scots law.” In Research Handbook on Remedies in Private Law. Edward Elgar Publishing, 2019.
Mane, Rakhi. “An analysis of the concept of caveat emptor.” Freedom of Speech (2019): 54-58.
Roland, Djieufack. “Sales and Conformity of Goods: A Legal Discourse.” In Banking and Finance. IntechOpen, 2020.
Willett, Chris. “Re-theorising consumer law.” The Cambridge Law Journal 77, no. 1 (2018): 179-210.
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