A contract of sale is a contract whereby the seller transfers or agrees to transfer the property or goods to the buyer for a price. Conditions and warranties to the contract of sale can either be implied or expressly mentioned. Implied conditions are those which are presumed to have been present in the contract even though they are not expressed in words or written down. Such conditions are limited to certain situations and are valid in the eyes of law and breach of those are treated as a breach of any other ordinary condition. Now, when it comes to ensuring the quality or fitness of the goods being sold by the seller there is no implied condition for it except for some exceptional cases which have been mentioned in Sec. 16 of the Sale of Goods Act, 1930. There being no actual protection for general cases of such defaults, the section brings the common law rule of caveat emptor into the discussion, which basically means “buyer beware”. This rule implies that when a buyer gets involved in a contract of sale/purchase with the seller, it becomes the job of the buyer to ensure that the good is as per their requirement and is in a proper condition at the time of the purchase. This rule puts the obligation on the buyer to be certain of the quality of the goods by examining them thoroughly.

Exception to the rule; Section 16 of the Sale of Goods Act, 1930

The rule of caveat emptor originally started from the times when the buyer would go to a regular market and the seller and buyer would come in physical contact when the sale was being made. The title of the seller to transfer it to the buyer however could have been implied even in such situations but the quality of the product was left to the buyer to judge of being of the proper description or not. In such a scenario the buyer would be responsible for selecting the good which is best suitable to fulfill their purpose, both quality, and fitness-wise.  The maxim that follows here is caveat emptor qui ignorare non debuit quod jus alienum emit, which means “let the buyer or purchaser beware, who ought not to be ignorant that he is buying the rights of another”, which basically means that the risk is that of the buyer and not the seller[1]. The Supreme Court applied this doctrine in a case where the question for a penalty for the import of gold and silver on the basis of a forged special import license was raised. It reasoned that the duty to enquire whether the license was forged and about its genuineness was on the buyer and he had to establish that he did so in court, failing to do that would leave him with no remedies but only the consequences[2].

This rule is applied by the courts at all times except for the instances covered under Sec.16 of The Sale of Goods Act, 1930, or when the vendor gives an express warranty to the buyer. In certain cases, no particular or precise words are even necessary if it can be proved that the intentions of the parties at the time of purchase were clear and hence the presence of an implied warranty is proved. Such situations can arise in cases say where the price of the product is so that it ensures with it the implicit condition of its basic quality and fitness according to the maxim “sound price imports a sound article”, which have also been recognized by the English and American courts as a valid ground.

The section provides for three situational provisions to the general rule of the buyer having to beware at all times and being responsible for all consequences arising out of his purchase. The first one of those mentioned in sub-section (1) says that if the buyer makes clear the particular purpose for which the product he is purchasing is meant for, so as to in other sense imply that the buyer is relying on the seller’s judgment and expertise in that field and that the goods are of a description in which the buyer trades, then in such a case there would be an implied condition as to the quality of the product being sold and it would be the seller’s duty to make sure that the buyer gets the right article for his purpose. Here, making the purpose known, expressly if the good is fit to be used for varying purposes, is one of the essentials. That is why when X went to a chemist’s shop and asked for a hot-water bottle, the chemist showed one and said that it was meant for hot water but not boiling hot. After a few days of X buying the bottle and finally using it, the bottle burst and injures. Since the bottle was not fit for the “purpose” it was meant for, there was an implied condition found for its fitness to be used for that purpose under Sec.16(1) and so X was eligible to avail damages[4]. In another case where the buyer when trying to bite into a bun he bought from a bakery, had his teeth broken as a consequence of a stone in the bun and which later resulted in an abscess formed in his jaw. The court held that the purpose of the bun was to be eaten and it was unsuitable for that as it had a stone and it was implied that the buyer relied on the seller’s skills as he chose that particular bakery[5].

If the goods being sold are in general fit for that particular use, but for some particular problem or abnormality of the buyer is unsuitable for their use, then the seller cannot be held responsible in such cases for being in breach of an implied condition. For example, in the case of Griffithasv. Peter Conway Ltd.[6], the plaintiff contracted dermatitis after using a Harris Tweed jacket she bought. On investigating, it was found that the plaintiff had abnormally sensitive skin and the coat was otherwise fine and reasonably fit to be worn by any other normal wearer and hence the seller was held not liable for the damage caused. However, where the herring meal was sold solely for feeding animals, and the meal was found to be contaminated because of the presence of some toxic element, the seller was held liable when it created serious damage to the minks (who are peculiarly susceptible to that toxic element) of the plaintiff as such product was harmful to most animals and not just particularly the minks[7].

Now, even though when the goods were purchased by their trade name and there was no implied condition as to their quality and fitness, there is a need for it to be of merchantable quality as given under Sec. 16(2) as seen in the case of Wilson v. Rickett Cockerell and Co. Ltd.[8], where the plaintiff placed an order for a consignment of “Coalite” which contained an explosive substance and when it was used by the plaintiff, it blew up and caused danger. It was held that even though the goods had been purchased under a trade name and due to which there was no implied condition, yet the coal was not fit to be traded and hence was not of merchantable quality as described under this section. In another case the judge said that if a very generic or vague word is used to describe like “ice” which when taken in the literal sense may satisfy even a worthless article while there is a commercial contract involved, the court may accordingly instruct the jury that the word means more than just it’s bare dictionary meaning and that it calls for a merchantable quality product[9]. Merchantable simply doesn’t mean that they look fine and so they are saleable but they also need to be useable. For this reason, when a garment which looked all right was sold but later found not suitable to be put next to the skin was termed to not be of merchantable quality in the statutory sense[10].

It is obvious here that if the buyer selects the goods himself, there would be no such implied condition[11] for any defects which would have come up in a proper examination conducted by the buyer. In such cases, the buyer themselves would be liable for any such defects and the implied condition would only protect him from any hidden defects that arise from the use of the article. There have been debates over and again in courts on what is meant by a fair examination by the buyer, which has been seen to change from one case to another. Just a mere opportunity of examining is not regarded to be sufficient. Similarly, if the buyer is given the chance to examine the goods and if needed he had an opportunity to extensively examine it but fails to do so and which causes damage to him, he would be himself liable for such an outcome. There is an exception to this proviso that if the examination, however thorough, would not have revealed any of the defects, in such a case the exception in sub-clause (2) wouldn’t be applicable and the buyer would be held liable[12]. 

Section 16(3) goes on to state that “An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.”, which means that at times when the nature of the purpose or usage of trade can be understood by the seller through the very nature of the transaction, then in such scenarios there is an implied warranty that arises as to the quality and fitness of that saleable article. For example, if  a person goes to a medical shop to buy a thermometer, the shop owner can easily contemplate the purpose for which the buyer might be purchasing the said good and thus it is an understood fact here that the buyer would rely on the seller’s skill and judgment to provide them with the right product, which in turn gives rise to an implied warranty as to the quality and fitness of the product. Additionally, according to Sec.16(4), in case there exists an express warranty, the presence of any of the first three sub-clauses would only be superadded[13] to the contract of the sale and won’t negate the implied conditions just because of the presence of the express warranties.

Conclusion

In conclusion, we can say that the main aim is that the intentions of the parties are clearly understood by both and that itself is at times sufficient in such contracts of sale. The major contention would be whether the seller was successful in substantially furnishing the product that the buyer bargained for. That the product was of a set standard quality and the buyer too was reasonably cautious when given a chance to check the article for themselves. In view of the contemporary complexities of trade and the various conditions springing up inside the modern trade enabling the seller to contract himself out of the implied situation as to quality or fitness of the goods for a selective purpose, there is a pressing need for the amendment of the (Indian) Sale of Goods. In India additionally, there’s a want for the safety of the client’s interest towards the possible exclusion or restriction of liability by the seller and a more effective presence of caveat venditor (seller beware) than caveat emptor.

Endnotes

[1] D. F Mulla, The Sale of Goods Act & The  Indian Partnership Act 48 (LexisNexis, Haryana, 11th Edition, 2019).

[2] Commr of Customs (Preventive) v Aafloat Textiles (I) Pvt. Ltd., (2009) 11 SCC 18: [2009] 2 SCR 490: JT 2009 (5) SC 276.

[3] Bulwinkle v. Cramer, 27 S.C., 376.

[4] Priest v. Last, (1993) 2 KB 148; Re Andrew Yale &Co, (1932) 59 Cal 928 : 140 IC 877 : (32) AC 879.

[5]Chaproniere v. Nason, (1905) 21 AC 633.

[6] (1939) 1 All. ER 685.

[7] Ashington Piggeries- Case, (1972) AC 441.

[8] [1954] 1 QB 598.

[9] Merchie v. Cornell, 155 Mass. 60.

[10] Grant v Australian Knitting Mills, AIR 1936 PC 34 at 40

[11] Benjamin’s Sale of Goods, 7th Edn, pp 662, 663.

[12] Grant v Australian Knitting Mills, AIR 1936 PC 34 at 40

[13] Baldry v Marshall, (1925) 1 KB 260; Horn v Minister of Food, (1948) 2 All ER 1036

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