What is caveat emptor?
Caveat emptor is a Latin expression that translates as "Let the buyer beware." It is a doctrine of contract law that requires the buyer to examine and test the goods for any flaws or problems before buying them. Caveat emptor is a fundamental principle in trade and commercial transactions between sellers and buyers. The buyer bears the risk of finding out if the goods are of good quality and fit for his or her needs. If the buyer neglects to do so and the goods are faulty or inadequate, he or she will have no legal recourse against the seller.
Application of Caveat Emptor
The caveat emptor principle can be applied to any goods and services transactions. Still, it is nowadays mainly used in real state transactions. Almost all transactions of goods and services are regulated by dedicated laws and acts, i.e., Caveat emptor has been losing its charm.
Moreover, the biggest exception from the caveat emptor is financial services which the financial institution regulates. Financial service providers are bound to share all the information related to the product.
However, the caveat emptor is not applicable when the seller shares false information about the product or there is a product distortion.
How does caveat emptor work?
The caveat emptor originated in 1603 when the Chandler and Lupus case came into the light and used it the first time. As a matter of fact, the seller sold the bezoar stone to the buyer; bezoar is known for its healing power. The buyer then found out that the healing properties of the bezoar stone are not working. Consequently, the buyer demanded a full refund, but it was refused.
The Exchequer Court decided that the seller was not at fault for selling a stone that he claimed was a bezoar stone. The buyer had no evidence that the seller was dishonest about the stone and did not promise anything about the stone's quality or effects. I.e., the court dismissed the case as having no grounds for legal action.
The case became a lesson for the buyer to be aware, vigilant, and well-informed before buying anything. The buyer is responsible for checking whether the item meets the buyer’s expectations and has no defects. If not, the buyer might not be compensated, and the seller will not be liable for consequences