Multiple choice

The doctrine of caveat emptor – let the buyer beware, applies in certain contracts to the extent that even mere silence as to facts that would have otherwise affected the willingness of the party to enter into the contract, would not constitute fraud.

Ali sells at an auction to David, a horse which he knows is in unsound condition because of its age. He does not mention that fact to David. Does this constitute fraud by Ali?

  1. Yes, this constitutes fraud as Ali knows the horse’s unsoundness, which he knowingly concealed.

  2. No, this does not constitute fraud as the buyer is supposed to find out all possible defects in the commodity before purchasing it.

  3. No, this does not constitute fraud as horses do become unsound due to age and the buyer is supposed to know that.

  4. Yes, this constitutes fraud as Ali was under the duty to speak here, being in the position of a seller of a commodity and was legally bound to do so.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option 1: No, as per caveat emptor, buyer in an auction is allowed inspection of the object of auction and has to exercise his own awareness while making a decision.

Option 2: No, the buyer needs to be aware of the characteristics of the product he is showing his interest in to buy. He needs to exercise his awareness.

Option 3: No, not necessarily should he be knowing this particular fact. He, however, may have had the horse examined by any person experienced in the trade and could then have possibly rejected the offer.

Option 4: No, under the stated principle of caveat emptor, the seller need not explicitly mention any particular characteristic of the product being sold/auctioned.

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