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UNDERSTANDING THE SHIFT OF BURDEN TO CAVEAT VENDITOR IN THE CONTEXT OF CONSUMER PROTECTION ACT

Publications, Research paper

ABSTRACT

The transformation from Caveat Emptor to Caveat Venditor has brought a new sensation in the market system and the focus of the particular principle of law has shifted. As time passed, the government and lawmakers discovered that the doctrine of Caveat Emptor is not suitable for application and acceptability at the growing and changing rate of trade and commerce in the dynamic situation. This change was initiated as a need for balancing the situation of buyers and sellers reasonably equally and not to place the entire burden on the shoulders of the buyers by stating that they are responsible for obtaining a product or service through their due diligence. Thus, the concept of Caveat Venditor was introduced to shift the burden on sellers to be aware and have knowledge about the goods or services they are selling, their nature, fitness, potency, and other necessary information and provide the same to the buyer. The sellers engaging in unethical business practices and market manipulation must be aware of this Act which holds them accountable if anything goes wrong and harms the consumers concerning the products or services obtained. The new Consumer Protection Act of 2019 has also introduced new provisions along with widening its scope to hear the consumers’ grievances.

Keywords: Caveat Emptor, Caveat Venditor, Consumers, Consumer Protection Act, Burden, Liability, Grievances.

TABLE OF CONTENTS

  1. INTRODUCTION
  2. RESEARCH METHODOLOGY
  3. REVIEW OF LITERATURE
  4. METHOD AND LEGAL ANALYSIS
  5. JUDGEMENTS
    1. Ashington Piggeries Ltd. and Another Appellants v. Cristopher Hill
    1. Zamiruddin v. Nidhi Medicos
    1. Hindustan Motors Ltd. and Another v. N. Siva Kumar and Another
  6. CONCLUSION AND SUGGESTIONS
  7. REFERENCES
  1. INTRODUCTION

The legal maxim ‘caveat venditor’ which means let the seller beware, is a Latin term that is contrary to ‘caveat emptor’ implies let the buyer beware[1]. Caveat Emptor originated from the common law and is known to be one of the rigid rules that made buyers bear the responsibility or burden of any problem that might be encountered in relation to a service or good[2]. This rule implies that it is the duty of the buyer to be aware while buying and cannot blame anybody for the mistake except himself. This became a tool for the sellers to defend themselves and escape liability[3],  and was greatly misused. Upon the observation that levying the whole responsibility on the buyers will not be a proper approach. Some exceptions to the doctrine of Caveat Emptor were introduced, finding the necessity of revealing the appropriate information to the buyers by sellers for the products and services being obtained for non-commercial purposes. And later, it followingly led to the origin of the rule of Caveat Venditor. The new Consumer Protection Act of 2019 adapts the principle of Caveat Venditor to protect the rights and interests of the buyers as it is highly necessary for the perpetual transactions in contemporary trade and commerce due to the changes and developments in the products and services, their nature, the usage in a fast pace that became more difficult for the buyers to ascertain the nature of the product and services reasonably. And thus, imposing certain necessary responsibilities on the sellers to reveal the appropriate information to the buyers.

  • RESEARCH METHODOLOGY

A doctrinal research methodology is validated for this research paper which includes sources collected from primary and secondary sources such as case laws, legislations, acts, and journals, research papers, and articles respectively. These sources assist the researchers throughout the research project to have an analytical understanding of the topic and draw conclusions. The study of this research paper is descriptive and analytical.

  • REVIEW OF LITERATURE

Nigam S, 2020, From Caveat Emptor to Caveat Venditor: The Consumer Protection Act 2019 And the Consumer Rights, Legal News and Views, Volume 34, No. 3, pp. 2-7.

The Consumer Protection Act came as a strengthening force for empowering the rights of consumers which somehow ended the trend of Caveat Emptor. Due to the evolution in the trends of trade, it became difficult for the consumers to ascertain its nature and usage using their intelligence as an ordinary prudent person. Thus, it called for reforms in the field of consumer rights and introduced transparency in the transactions which took a step forward from the rule of Caveat Emptor to Caveat Venditor. This, initiation paved a new way for creating such an environment to protect the consumers from the exploitation of sellers and new market trends.

Pistis Marco, 2018, From Caveat Emptor to Caveat Venditor – a Brief History of English Sale of Goods Law.

In the olden period, the principle of Caveat Emptor was a yardstick to decide on the cases where trade and transactions were involved. Maximum or most of the burden lies on the consumers to be careful and aware of the goods and services that are to be obtained by them. Other in the cases of false statements by the sellers, no other liability was imposed on them and the entire burden lay on the buyers. At that time, consumers were mostly aware of the nature of goods and could identify the deficiency if any. But the changing times have brought out such a situation where it called for the need to shift the burden on the sellers and levy the responsibility on them to make the consumer aware of the detailed description of the goods and services they are obtaining.

  • METHOD AND LEGAL ANALYSIS

The emerging focus on prioritizing fair treatment to the buyers and consumers of the goods and services necessitated the shift of burden from Caveat Emptor to Caveat Venditor and this created an imminent foundation for the concept of consumer protection in India[4]. Previously, the buyer’s choice-making was entirely his burden and it was assumed that as a prudent man, he would know the aftermath of buying a certain product or service. It was expected that the choice of product will be made reasonably according to the interest of the buyer on his own and that he will be responsible for the same. One is considered a Consumer under this Act who obtains the goods and services for non-commercial use or purpose. A consumer can be a buyer or user of goods or one who hires or avails of any service or a beneficiary of such services for an agreed or promised consideration. The purpose of the Consumer Protection Act is to protect the interest of the consumers by safeguarding them from sellers’ unfair trade practices. It is most likely that this Act has adopted the principle of Caveat Venditor to make the seller beware of the goods and services they are selling, thus assuring the safety of the consumer’s interest and strengthening the rights of consumers.

In recent times, transactions have evolved from traditional and personal to digital, that is electronic transactions. Thus, only the manufacturer may not be the seller like they used to be in the olden days in most cases now. A seller is anyone who is a manufacturer, distributor, wholesaler, retailer, direct seller, or an electric service provider. A service provider is also considered as a seller under the Consumer Protection Act. Besides the origin and progress of this new kind of economy which is appreciated, sadly the consumers are also exposed to more exploitation. Thus, the shift of the burden to Caveat Venditor from Caveat Emptor was an initiative to bring reforms in the field of consumer rights in reference to the Consumer Protection Act of 2019[5]. It was also considered as a socio-economic transformation that promised to ensure a high degree of protection to the consumers.

Adapting the principle of Caveat Venditor is to bring developments in the arena of consumer protection. This has resulted in a shift of 180 degrees in the law away from the principle of Caveat Emptor. It is to be noted that this change is to allow the buyers to use this principle under the law in good faith, as a tool or shield to protect their rights in reference to the goods or services and not misapply or use it as an armor to go against the sellers for their own negligence, misconduct or personal retribution. It allows the buyers to take legal action against the sellers in case of any kind of exploitation. It benefitted the consumers by enlarging the scope of grievances that can be brought before the law and getting justice for the same. With the increasing change in trade and the transactions relating to it as the population is moving towards adopting e-commerce for buying and selling various products and services, the new Consumer Protection Act of 2019 has been introduced with the modified framework in relation to the dynamic situation. The sellers now have an increased responsibility due to this and have to be more aware as the consumers are not only entitled to the benefit of filing a complaint and receiving compensation for defective products and deficiency services but also for the unfair contract terms and practices, spurious goods, excessive price charging, hazardous goods, misleading advertisements and many more.  That is how the concept of ‘Product liability action’ came into the picture and was newly introduced in the new Act of 2019, and a complainant can bring action against the product manufacturer, product seller, or product service provider to obtain recourse[6] for all the above mentioned ‘harm’ that he may suffer while obtaining a product[7]. Speaking of harm, it might be damage to the property other than the product obtained, physical injury, mental agony, or emotional distress as well[8].

All these changes were made not only to empower the rights of the consumers but also to create responsibility on the part of sellers for the product they sell, to inform the buyers about the quality, quantity, price, potency, purity, and standard of the goods and provide an implied warranty for the goods obtained so that the consumers themselves need not diligently check the quality of each of the product they want to buy. It is the duty of the seller to disclose the nature, usage, directions of use if necessary, and special precaution information if the product is of a dangerous nature to the buyer while the product or service is being obtained. It is because any goods bought by the buyer are impliedly expected to be of a ‘merchantable quality’ and this is a necessary condition for any product in a market that is offered for sale. Again, it is the burden of the seller to ensure that the good is to be of a merchantable quality, that is, the product is reasonably fit for the purpose for which it is usually obtained. Thus, the court also adapts ‘usability testing’ in some cases, as it gives judges and court administrators, a new perspective to carry out the proceedings and determine the real merchantable quality of the products for which the complaint is filed, according to its general purpose of obtainment and usage.

All the modifications discussed above have a main purpose, and that is to protect the consumers from the sellers’ unfair trade practices. If the same principle of Caveat Emptor had been followed in the present situation, it would have been of great advantage to the fraudulent sellers and they have used this doctrine to escape from liability and do not undertake any risk to provide that information to the buyers which is necessary while buying a certain product by saying that it is the burden of the buyer to use his due diligence to ascertain the pros and cons of buying a product. It is not that the principle of Caveat Emptor is entirely wrong, but the developments and changes in the products called for the necessity of Caveat Venditor, where it is the duty of the sellers to inform the buyers about every description of the product necessary so that interest of the consumer who is obtaining the product for some specific purpose is protected. As generally assumed, the seller has more knowledge about the product he is selling than the buyer, and medical products are a good example of this statement, and also due to changes in the nature of goods it is the responsibility of the seller to specify the description to the consumer before selling.

To discuss how the legal provisions provided by the Act through adapting the principle of Caveat Venditor are specifically serving the consumers, the focus can be made on the old as well as new adaptions that are holding the sellers responsible for unfair and restrictive trade practices, misleading advertisements, defective products, and deficiency services offered and unfair contract that containing such terms and conditions that is most beneficial to the sellers, thus violating the rights of consumers. Additionally, the initiative was made with the intention to protect consumers from market crimes and fraudulent sellers. Thus, it led to the creation of Consumer disputes redressal commissions establishment at the district, state, and national levels to hear the grievances of the consumers specifically and to ensure speedy trials as much as possible. Apart from that, consumer mediation cells have been established for the consumers to choose, out of court settlements as per their interests.

However, the usage of the same is expected to be fair at the end of the buyers. Just because the burden was shifted upon the sellers to be aware of the goods and services offered for sale, it is not that the consumer can be completely ignorant about goods and services he is obtaining and act unreasonably towards the same. Law is made to protect those people whose rights have been violated and not to misuse one’s rights to exploit the other person. Buyers should not take unfair advantage and misuse their rights by being wholly negligent and making rational decisions in the buying process. When there is genuine consent by the buyer and the seller has disclosed all the necessary information regarding the goods or services including their nature, usage, and potency, then the buyer will not be in a position to blame the seller if he suffers any harm or injury in relation to the obtained goods or services, as the ‘Maxim of equity’ says that one who approaches the court must come with clean hands. Hence, the buyer cannot blame or make the seller responsible for his own fault. He can only do so when there is no commission of wrongdoing at his end and any grievances he suffered were because the seller was negligent and not aware or refused to be aware of the goods or services being obtained by the buyer. It is true that the shift of the burden to Caveat Venditor indeed has brought many positive changes in the market, trade, and commerce, but the success of it can be truly ascertained when there is the right usage of the same by the buyers.

  • JUDGEMENTS

To understand the shift of burden or responsibility on the sellers, the judgements or case laws can be looked into for getting an insight regarding the same.

  • For the first time in Ashington Piggeries Ltd. and Another Appellants v. Cristopher Hill[9]’s case, Lord Diplock, sensed the swing of the pendulum in favor of the then-new principle Caveat Venditor and was alarmed about the arising of the changing situation[10]. In this case, the situation required the law to move into the path of protecting the buyers. The plaintiff entered into a contract with the defendant for the delivery of an animal foodstuff that required mink nutrition specifically. However, he found an issue regarding the same and sued the seller. The seller’s contention was that he was not a professional dealer of the same and thus won’t be liable and it is the buyer’s responsibility to be aware of the product he is obtaining according to the principle of Caveat Emptor. The question of whether it was sale by description was also raised. However, the focus was on the fact that it is not right to let the seller take the defence of not being a professional trader of the product he is offering for sale every single time. It was found necessary that he must be aware of the description of the product and all other necessary details and also make the buyer aware of the same.
  • In the case, Zamiruddin v. Nidhi Medicos[11], the seller allured the buyer into buying the capsule by saying that he would win a gold coin of 25 grams if he performs the conditions according to the directions mentioned on the packet. However, it was a game of chance or more precisely lottery kind of arrangement which was unknown to the buyer. The buyer did not even win the lottery. The case was filed stating there was manipulation on the part of the seller as the buyer would not have brought the capsules if not for the gold coin. It was held by the court that it was an unfair trade practice by the seller to induce the buyer into getting a lottery ticket unknown to his knowledge and not disclosing the true nature of the same. The judgement also entitled the buyer to receive compensation from the seller.
  •  Hindustan Motors Ltd. and Another v. N. Siva Kumar and Another[12], is one of the important cases, where sellers were made liable for causing mental agony to the buyers as they failed to satisfy the purpose of obtainment by the buyers. The appellants had sold to the respondents, a defective car without being responsibly taken care of before the sale. It upholds the negligence to be aware of the product at the time of sale by the sellers. In this case, it was also made clear and can be observed that, as it was a manufacturing defect, the dealer is not liable but the manufacturer is and this defect just cannot be ascertained by mere use of due diligence neither by the dealer nor the buyer. Thus, the repairs and replacement offered by the appellants is not enough to substitute the buyer’s original requirement and the mental agony caused to him. The court ordered the refund along with the interest and cost that occurred to be payable to the respondent by the appellants.
  • CONCLUSION AND SUGGESTIONS

Caveat Venditor which was introduced for the fair treatment of the buyers has become widely accepted in the market now with the happening of the Consumer Protection Act of 1986. However, the changes brought by the dynamic society by adapting e-transactions have widened the scope of trade and commerce, and thus, Consumer Protection Act, 2019 was introduced by making amendments to the previous law and by introducing new provisions such as ‘Product Liability’, ‘Product Liability Action’ etc. to strengthen the protection of consumers rights and their interests. As the government became more aware of the changing market situation, there felt a need to balance the same and found the necessity of disclosure of relevant information by the sellers to the intended buyers so that the entire burden does not shift onto the shoulders of the buyer. This has paved the way to tackle this situation and focus on protecting the consumers from exploitation by unethical sellers and adopt a new principle, unlike the doctrine of Caveat Emptor which is basically rigid. It’s not about just protecting the rights of the consumers but also encouraging and ensuring proper perusal of the goods and services prior to offering them for sale.

  • REFERENCES
  • STATUTES
  • The Consumer Protection Act, 1986.
  • The Consumer Protection Act, 2019.
  • JOURNALS AND ARTICLES
  • Nigam S, 2020, From Caveat Emptor to Caveat Venditor: The Consumer Protection Act 2019 And the Consumer Rights, Legal News and Views, Volume 34, No. 3, page 2-7.
  • Pistis Marco, 2018, From Caveat Emptor to Caveat Venditor – a Brief History of English Sale of Goods Law.
  • https://www.legalbites.in/caveat-venditor/?infinitescroll=1
  • https://www.legalserviceindia.com/articles/caveat1.htm
  • https://nickledanddimed.com/2020/08/10/from-caveat-emptor-to-caveat-venditor-what-does-the-new-consumer-protection-act-mean-for-consumers-today/
  • https://www.manupatrafast.in/pers/Personalized.aspx
  • https://www.scconline.com/blog/post/2020/12/24/consumer-protection-act-2019-a-primer/
  • https://taxguru.in/corporate-law/offering-critique-product-liability-vis-vis-consumer-protection-act-2019.html
  • https://www.studocu.com/in/document/institute-of-management-technology-ghaziabad/legal-aspects-of-business-i/transformation-of-caveat-emptor-to-caveat-venditor/38206049

BY

VAISHNAVI N

ALLIANCE SCHOOL OF LAW,

ALLIANCE UNIVERSITY,

BENGALURU.

[1] Bhusari Sahajpreet, Caveat Venditor Meaning, Origin, Application and Important Case Laws, LEGAL BITES (Jun. 10, 2023, 7:20 PM), https://www.legalbites.in/caveat-venditor/?%20infinitescroll=1

[2] LEGAL SERVICE INDIA, https://www.legalserviceindia.com/articles/caveat1.htm (Jun. 10, 2023, 8:50 PM).

[3] NICKELED AND DIMED, https://nickledanddimed.com/2020/08/10/from-caveat-emptor-to-caveat-venditor-what-does-the-new-consumer-protection-act-mean-for-consumers-today/ (Jun. 10, 2023, 9:35 PM).

[4] MANUPATRA, https://www.manupatrafast.in/pers/Personalized.aspx (last visited Jun. 10, 2023).

[5] Nigam S, From Caveat Emptor to Caveat Venditor: The Consumer Protection Act 2019 And the Consumer Rights, 34 LNV 2, 2 (2020).

[6] Shukla Suchita, Consumer Protection Act, 2019: A Primer, SCC ONLINE, (Jun. 10, 2023, 9:20 PM), https://www.scconline.com/blog/post/2020/12/24/consumer-protection-act-2019-a-primer/

[7] The Consumer Protection Act, 2019, § 2(35), No. 35, Acts of Parliament, 2019 (India).

[8] The Consumer Protection Act, 2019, § 2(22), No. 35, Acts of Parliament, 2019 (India).

[9] Ashington Piggeries Ltd. and Another Appellants v. Cristopher Hill, [1972] A. C. 441.

[10] MONDAQ, https://www.mondaq.com/italy/arbitration–dispute-resolution/40206/from-caveat-emptor-to-caveat-venditor—a-brief-history-of-english-sale-of-goods-law (last visited Jun. 11, 2023).

[11] Zamiruddin v. Nidhi Medicos, CC/276/2016, DCDRC, 2021.

[12] Hindustan Motors Ltd. and Another v. N. Siva Kumar and Another, (2000) 10 SCC 654.