Service charges: Let the buyer beware

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Published: January 19, 2017 6:14:25 AM

A contract between a customer and a hotel/restaurant is contingent on quality of information available and there is asymmetry there

restaurant-reuters-lRare is the person who doesn’t know the meaning of “caveat emptor”—“let the buyer beware”. (Reuters)

The “caveat emptor” expression has been floating around even more since December 14, 2016. On that date, ministry of consumer affairs wrote to all the state governments about consumer complaints regarding 5-20% “service charge” imposed by hotels and restaurants in lieu of tips. The letter mentioned unfair trade practices under the Consumer Protection Act (CPA) and added that Hotel Association of India concurred about service charge being discretionary/voluntary. A dissatisfied customer need not pay it. Hence, hotels/restaurants should prominently display this option of not paying. However, National Restaurant Association of India (NRAI), feels service/charge shouldn’t be voluntary. Nor does it think there is a violation of the CPA. This column isn’t about legalities. Legalities have been, and will be tested, by courts. A contract between a customer and a hotel/restaurant is contingent on quality of information available and there is asymmetry there. Had all hotels/restaurants provided transparent information on service charges, and had their associations pushed for a minimum self-evolved template of such information, the freedom to contract argument would have been more plausible. Lack of transparency isn’t only about service charge, but also the way service tax/abatement is computed, and VAT rates used. But as I said, this column isn’t about such issues. It is about “caveat emptor”. Perhaps I should add “caveat venditor”, “let the seller beware”. Even better, “caveat lector”, “let the reader beware”.

Rare is the person who doesn’t know the meaning of “caveat emptor”—“let the buyer beware”. It is Latin, of course, and there is a belief it is a dictum with hoary Roman origins. That’s not true. The Romans didn’t coin the expression, nor did they possess such a legal principle, determining relations between buyers and sellers. In that case, who was the first person to coin the expression? There is a lemming-like relationship among scholars too. Because one noted scholar has said (written) something, without checking the original, everyone blindly cites it, also without checking. Thus, I discovered the following assertion. We owe the expression to Sir Anthony Fitzherbert (1470-1538). Anthony Fitzherbert was a judge. He wrote extensively on law and in 1534, published “La Novela Natura Brevium”, a compendium on law and legal principles and that book first coined the expression. Initially, that book was written and published in Latin and later, there was a version in English. The Preface states, “…there are divers Maxims and Fundamentals in the Knowledge of the Common Laws of the Land, which a Man ought to believe very necessary for those who will understand the same Law, especially at the beginning of their Studies; for upon those Fundamentals the whole Law doth depend.” Despite the language of the day, I found this a fascinating book. To clarify, I read the English version, not the Latin.

The English version doesn’t have the expression “caveat emptor”. For that matter, neither does the Latin version. But Anthony Fitzherbert did bring up the horse. “If a Man do sell unto another Man a Horse, and warrant him to be found and good, and if the Horse be lame or diseased, that he cannot work, he shall have an Action upon the Case against him…..But note, it behoveth that he warrant it to be good, and the Horse to be found, otherwise the Action will not lie. For if he sell the Wine or Horse without such warranty, it is at the other’s Peril, and his Eyes and his Taste ought to be his Judges in that Case.” In plain English, if the seller hasn’t given a warranty, it is the buyer’s problem. That may set out the doctrine, but there is no use of the expression “caveat emptor”. This takes us to another Fitzherbert, known simply as Master Fitzherbert. In 1523, he published a book (in English, not in Latin) titled “The Book of Husbandry”. Though in English, it used plenty of Latin expressions. Section 118 is on wartes (warts) in horses. “…but if he be tame, and haue ben rydden vpon, then Caueat emptor, beware the byer, for the byer hath bothe his eyen to se, and his hands to handell.” This is the first recorded use of the expression, in a book on animal husbandry, not on law.

Though the 1534 edition of “The Book of Husbandry” is cited more commonly, the year was 1523, not 1534. Is Master Fitzherbert the same as Anthony Fitzherbert? In all probability, especially given the example of the horse, but that is by no means certain. Presumably, the expression became common. In 1592, it figured in a rather unusual book, written by a “Gent” named Thomas Nash. This was a “Supplication to the Devil” by someone named Pierce Penilesse. The book has a “private epistle” from the author to the printer. This states, “There is nothing that, if a man list, he may not wrest or pervert; I cannot forbid any to think villainously, Sed caueat emptor, Let the interpreter beware, for none ever heard me make allegories of an idle text.” “Caveat emptor” is now stated as a complete Latin maxim. In English, this reads, “Let a purchaser beware, for he ought not to be ignorant of the nature of the property which he is buying from another party.” But I suspect it was never used in Latin in that way. The English version was rendered into Latin to confer legal respectability. Just as no seller should say, “let the buyer beware”. “For the discerning customer” sounds far better.

The author is Member, NITI Aayog. Views are personal

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