‘As Is Where Is' Basis – Striking Balance Between Caveat Emptor And Section 55 Of Transfer Of Property Act, 1882

1. 'AS IS WHERE IS' CLAUSE - INTRODUCTION

The phrase 'as is where is' is a clause in any agreement which implies that the thing so contracted is transferred, by one person to another in its existing condition and the transferee has accepted it with all its faults and defects, whether or not immediately apparent. This clause finds its root in the common law doctrine of 'Caveat Emptor'. Caveat Emptor means 'let the buyer beware'. This doctrine puts the duty on the purchaser to carry out all necessary inspection of the property before entering into an agreement1. If the purchaser fails to conduct such an inspection, then later, on identification of defects in the property may not be a ground to revoke or claim damages under the contract. In such cases it is presumed that the purchaser had the notice of defects, if any.

II. STATUTORY INCORPORATION OF 'AS IS WHERE IS' CLAUSE

Transfer of Property Act, 1882 (hereinafter referred as "TPA, 1882") incorporates this part of English Law as 'Doctrine of Constructive Notice' under section 3 of the Act as quoted herein below

"A person is said to have notice" of a fact when he actually knows that fact, or when, but for willful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it.

Explanation II: Any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof.

Nonetheless the TPA, 1882, also envisages the duty of the seller "to disclose to the buyer any material defect in the property or in the seller's title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover."2 This is, however, subject to the presence of contract to contrary between the parties.

III. UNDERSTANDING THE DIFFERENCE BETWEEN 'AS IS WHERE IS' AND CAVEAT EMPTOR

The doctrine of Caveat Emptor finds its origin in a 17th century case of Chandelor v. Lupos,3 where it was held that the defendant being the seller of the store is not liable to the plaintiff for any defect thereon since the plaintiff was at liberty to inspect the same. The doctrine later on developed on the principle that "no man can be cheated except it be with his own consent"4. On the other hand, 'as is where is' is a clause incorporated in the agreement generally by the seller in order to sell the property with defects, if any. At times this clause is also misused by the seller to escape their burden to disclose any material defect in the concerned property. In such cases the theory of Caveat Emptor...