Doctrine of 'Caveat Emptor' and 'Nemo dat quod non habet' rule; Sale of Goods

 

Doctrine of ‘Caveat Emptor’: ‘Doctrine of Caveat Emptor’ is originated from English principle of commercial law. Words ‘caveat-emptor’ means “let the buyer beware”. This doctrine is concerned with commercial transaction where the buyer is required to see whether the goods purchased will serve his purpose well or not. If the buyer is not careful and he later finds that the good does not serve is purpose, he will not be able to make the seller liable for it. Even if the seller does not disclose the defect in the goods, he cannot be held liable because the seller is under no obligation to tell the defects of his articles.     

Exceptions to Doctrine of ‘caveat emptor’: However, in the following exceptions Doctrine of caveat emptor is not applicable:

1. Implied conditions as to quality or fitness. It means when buyer specifies his purpose and relies on the skill of seller; the doctrine of caveat emptor is not applicable.
2. When goods are sold by description, it should be of merchantable quality. In such case, doctrine of caveat emptor is not applicable.
3. In case of edible items, implied condition of wholesomeness is applicable and goods are not fit for human consumption then buyer is not liable but seller will be liable.
4. Usage or custom of trade.
5. When the consent of buyer is obtained by fraud, the provision of doctrine of caveat emptor is not applicable.

What is Nemo dat quod non habet rule?

“Nemo dat quod non habet” literally means that "no one gives what he doesn't have". This is legal rule also known as ‘nemo dat rule’ and describes that the purchase of property from a person who has no right to sell the property. This rule is similar to the rule “Nemo plus iuris ad alium transferre potest quam ipse habet” which means that “one cannot transfer more rights than he has”. Even if the purchaser does not know that the seller has no ownership title on the property the rule stays still valid. In several cases making a judgment is difficult for court because more innocent parties are involved in it. In most of the Nemo dat quod non habet cases the seller who is not the original owner will sell the goods to a third party who is not aware that the seller is not authorized to sell the goods. In such cases, either the owner or buyer has to suffer the loss.

Exception to the Rule: Section 27 gives 2 exceptions to this rule and few more exceptions are described in sections 28, 29 and 30 of sale of goods Act. These exceptions may include-

1.      Estoppels: Estoppels arises from either the act or omission but it must be a legal obligation. Negligence which is not mere negligence but it should be in regard to the person also causes Estoppels.

2.      Sale by Mercantile Agent: Sale by Joint Owner which is described in Section 28 of the Sale of Goods Act, Sale by a Person in Possession Under Voidable Contract described in Section 29 of the Sale of Goods Act but also by Section 19 and 19A of the Contract Act, 1872, Sale by a Seller in Possession described in Section 30 (1), Sale by Buyer in Possession Section 30 (2) of the Sale of Goods Act, Resale by Unpaid Seller, Sale by Finder of Goods under Section 169 of the  Contract Act.