Raj is a manufacturer of talcum powder. Vikas purchased a talcum powder from Raj and after using it, he suffered from skin irritation due to a chemical residue available in talcum powder. Vikas plead that Raj is responsible for his suffering. Raj denied his liability on the basis that he was in no way responsible for the bad selection of the buyer (caveat emptor). Examine under the provisions of the Sale of Goods Act, 1930.
(i) Whether Raj would be held responsible?
(ii) Whether your answer would be different if Raj is only a trader of the talcum powder of a popular brand sold in a sealed container if it is a sale by description?

Question

Accepted Answer

(i) Whether Raj would be held responsible?
According to Section 16(1) of the Sale of Goods Act, 1930, there is an implied condition that the goods shall be reasonably fit for the purpose for which they are purchased, provided the buyer makes the purpose known to the seller and relies on the seller's skill or judgment.
In the instant case, Raj is the manufacturer. As a manufacturer of talcum powder, there is an implied condition that the product is fit for human skin usage. Since the powder contained a chemical residue that caused skin irritation, it was not of merchantable quality, meaning it was not fit for its ordinary purpose (application to the body).
The chemical residue constitutes a "latent defect" (not discoverable by ordinary inspection), making the product unmerchantable and unfit for use. Therefore, the doctrine of caveat emptor (let the buyer beware) does not apply here because the defect was not discoverable by ordinary inspection, and the seller (as manufacturer) is liable for the fitness of the product.
Raj, the manufacturer of the talcum powder, is responsible for the skin irritation of Vikas. Raj cannot deny liability based on the buyer's selection because the product was not of "merchantable quality," which is an implied condition in sale of goods. Vikas can claim damages from Raj for the skin irritation caused by the defective talcum powder.
(ii) If Raj is only a Trader: Section 16(2) of the Sale of Goods Act, 1930 states that where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or not), there is an implied condition that the goods shall be of "merchantable quality".
Even if Raj is merely a trader selling a popular brand in a sealed container, the goods must still be merchantable (i.e., fit for use). A product that causes skin irritation due to chemical residue is not of merchantable quality. The seller is liable for latent defects in the goods even if they are sold in a sealed container, as the seller is expected to sell goods that are fit for consumption/use.
Raj is still responsible for selling goods of unmerchantable quality, even if he is just a trader.
Alternate Answer (ii)
One of the exceptions of doctrine of Caveat Emptor is that, in case where the goods are purchased under its patent name or brand name, there is no implied condition that the goods shall be fit for any particular purpose [Section 16(1)].
Here, the buyer is relying on the particular brand name. However, when goods are sold in a sealed container of a reputed brand, the trader does not manufacture the goods and has no control over the contents.
Here, Raj is only a trader, not a manufacturer. So, the manufacturer is responsible and not Raj.

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