This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
The old 1871 case of Smith v. Hughes, tried by the England Court of the Queen’s Bench, is a cautionary tale of “Let the buyer beware” (caveat emptor) that relates to product specifications and the inspection of samples prior to purchase.
The case involved an agreement to purchase oats. The plaintiff, Smith, was a salesman who had agreed to sell the oats to Hughes, a horse trainer. Smith provided Hughes with a sample of the new winter oats. Hughes mistakenly believed them to be old oats, which he needed to feed his race horses. Smith was silent when Hughes referred to the “old oats.” When Hughes discovered that they were new oats, he refused to go through with the purchase. Smith sued. The Court applied the rule of caveat emptor and sided with Smith, finding that Hughes had been negligent in his inspection of the oats and could therefore not rely on his own error as an excuse to avoid honouring the contract.
This old case offers a fresh reminder to purchasing institutions to be careful when specifying requirements and conducting product evaluations, since they may land on the wrong side of the “buyer beware” rule.
