Define: Caveat Emptor

Caveat emptor is a Latin phrase that means “let the buyer beware.” In legal contexts, it is a principle that places the responsibility on buyers to conduct due diligence and inspect goods or property before making a purchase. Under the caveat emptor principle, sellers are not obligated to disclose defects or deficiencies in their products, and buyers assume the risk of any potential issues that may arise after the purchase. This principle is often applied in transactions involving used goods or real estate, where sellers may not have full knowledge of the condition of the items being sold. However, in some cases, consumer protection laws may impose certain duties on sellers to disclose material defects or provide accurate information about the products they are selling, limiting the application of caveat emptor.

Caveat emptor is Latin for “Let the buyer beware”. Generally, caveat emptor is the property law doctrine that controls the sale of real property after the date of closing.

Explanation

Under the doctrine of caveat emptor, the buyer could not recover from the seller for defects on the property that rendered the property unfit for ordinary purposes. The only exception was if the seller actively concealed latent defects. The modern trend in the US, however, is one of the implied warranties of fitness that applies only to the sale of new residential housing by a builder-seller, and the rule of caveat emptor applies to all other sale situations (i.e., homeowner to buyer). [See Stambovsky v. Ackley, 572 N.Y.S.2d 672 (N.Y. App. 1991)] Many other jurisdictions have provisions similar to this.

Before statutory law, the buyer had no warranty on the quality of goods. In many jurisdictions, the law now requires that goods be of “merchantable quality. However, this implied warranty can be difficult to enforce and may not apply to all products. Hence, buyers are still advised to be cautious.

In addition to the quality of the merchandise, this phrase also applies to the return policy. In most jurisdictions, there is no legal requirement for the vendor to provide a refund or exchange. In many cases, the vendor will not provide a refund but will provide a credit. In the case of software, movies, and other copyrighted material, many vendors will only do a direct exchange for another copy of the exact same title. Most stores require proof of purchase and impose time limits on exchanges or refunds. However, some larger chain stores will do exchanges or refunds at any time with or without proof of purchase, although they usually require a form of picture ID and place quantity or dollar limitations on such returns.

Laidlaw v. Organ, a decision written in 1817 by Chief Justice John Marshall, is believed by scholars to have been the first U.S. Supreme Court case which laid down the rule of caveat emptor in U.S. law.

In the UK, consumer law has moved away from the caveat emptor model, with laws passed that have enhanced consumer rights and allow greater leeway to return goods that do not meet legal standards of acceptance. Many companies operating in the UK will allow customers to return goods within a specified period for a full refund, even if there is no problem with the product.

Caveat Venditor

Caveat venditor is Latin for “let the seller beware”. It is a counter to caveat emptor and suggests that sellers too can be deceived in a market transaction. This forces the seller to take responsibility for the product and discourages sellers from selling products of unreasonable quality.

In the landmark case of MacPherson v. Buick Motor Co. (1916), New York Court Appeals Judge Benjamin N. Cardozo established that privity of duty is no longer required in regard to a lawsuit for product liability against the seller. This case is predominantly regarded as the origin of caveat venditor as it pertains to modern tort law in the US.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 10th April, 2024.