''Caveat emptor'' (; from ''caveat'', "may he/she beware", a

subjunctive The subjunctive (also known as the conjunctive in some languages) is a grammatical mood, a feature of an utterance that indicates the speaker's attitude toward it. Subjunctive forms of verbs are typically used to express various states of unrealit ...

form of ''cavēre'', "to beware" + ''ēmptor'', "buyer") is

Latin Latin ( or ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken by the Latins (Italic tribe), Latins in Latium (now known as Lazio), the lower Tiber area aroun ...

for "Let the buyer beware". It has become a

proverb A proverb (from ) or an adage is a simple, traditional saying that expresses a perceived truth based on common sense or experience. Proverbs are often metaphorical and are an example of formulaic speech, formulaic language. A proverbial phrase ...

in English. Generally, ''caveat emptor'' is the

contract law A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more Party (law), parties. A contract typically involves consent to transfer of goods, Service (economics), services, money, or pr ...

principle A principle may relate to a fundamental truth or proposition that serves as the foundation for a system of beliefs or behavior or a chain of reasoning. They provide a guide for behavior or evaluation. A principle can make values explicit, so t ...

that controls the sale of

real property In English common law, real property, real estate, immovable property or, solely in the US and Canada, realty, refers to parcels of land and any associated structures which are the property of a person. For a structure (also called an Land i ...

after the date of closing, but may also apply to sales of other goods. The phrase ''caveat emptor'' and its use as a disclaimer of warranties arises from the fact that buyers typically have less information than the seller about the good or service they are purchasing. This quality of the situation is known as '

information asymmetry In contract theory, mechanism design, and economics, an information asymmetry is a situation where one party has more or better information than the other. Information asymmetry creates an imbalance of power in transactions, which can sometimes c ...

'. Defects in the good or service may be hidden from the buyer, and only known to the seller. It is a short form of ''Caveat emptor, quia ignorare non debuit quod jus alienum emit'' ("Let a purchaser beware, for he ought not to be ignorant of the nature of the property which he is buying from another party.") I.e. the buyer should assure himself that the product is good and that the seller had the right to sell it, as opposed to receiving stolen property. A common way that information asymmetry between seller and buyer has been addressed is through a legally binding

warranty In law, a warranty is an expressed or implied promise or assurance of some kind. The term's meaning varies across legal subjects. In property law, it refers to a covenant by the grantor of a deed. In insurance law, it refers to a promise by the ...

, such as a guarantee of satisfaction.

Explanation

Under the

of ''caveat emptor'', the

buyer Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. The term may also refer to a contractual o ...

could not recover damages from the

seller Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred ...

for defects on the

property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, re ...

that rendered the property unfit for ordinary purposes. The only exception was if the seller actively concealed latent defects or otherwise made material misrepresentations amounting to

fraud In law, fraud is intent (law), intentional deception to deprive a victim of a legal right or to gain from a victim unlawfully or unfairly. Fraud can violate Civil law (common law), civil law (e.g., a fraud victim may sue the fraud perpetrato ...

. Before

statutory law A statute is a law or formal written enactment of a legislature. Statutes typically declare, command or prohibit something. Statutes are distinguished from court law and unwritten law (also known as common law) in that they are the expressed wi ...

, the buyer had no express

ensuring the quality of goods. In the UK,

common law Common law (also known as judicial precedent, judge-made law, or case law) is the body of law primarily developed through judicial decisions rather than statutes. Although common law may incorporate certain statutes, it is largely based on prece ...

requires that goods must be "fit for the particular purpose" and of "merchantable quality", per Section 15 of the Sale of Goods Act but this

implied warranty In common law jurisdictions, an implied warranty is a contract law term for certain assurances that are presumed to be made in the sale of products or real property, due to the circumstances of the sale. These assurances are characterized as warr ...

can be difficult to enforce and may not apply to all products. Hence, buyers are still advised to be cautious.

By country

United States

Real estate

The modern trend in the U.S. is that the implied warranty of fitness for a particular purpose applies in the real-estate context to only the sale of new residential

housing Housing refers to a property containing one or more Shelter (building), shelter as a living space. Housing spaces are inhabited either by individuals or a collective group of people. Housing is also referred to as a human need and right to ...

by a builder-seller and that the ''caveat emptor'' rule applies to all other real-estate sale situations (e.g. homeowner to buyer). Other jurisdictions have provisions similar to this.

Chattel property

Under Article 2 of the

Uniform Commercial Code The Uniform Commercial Code (UCC), first published in 1952, is one of a number of uniform acts that have been established as law with the goal of harmonizing the laws of sales and other commercial transactions across the United States through U ...

, the sale of new goods is governed by the "perfect-tender" rule unless the parties to the sale expressly agree in advance to terms equivalent to ''caveat emptor'' (such as describing the goods as sold "as is" and/or "with all faults") or other limitations such as the below-discussed limitations on remedies. The perfect-tender rule states that if a buyer who inspects new goods with reasonable promptness discovers them to be "nonconforming" (failing to meet the description provided or any other standards reasonably expectable by a buyer in his/her situation) and does not use the goods or take other actions constituting acceptance of them, the buyer may promptly return or refuse to accept ("reject") them and demand that the defect be remedied ("cured"). When goods fitting the same description and expectations are available for sale (''e.g.'', when the vendor has other instances of the same mass-produced merchandise in stock inventory), either the vendor or the buyer may insist on an "even exchange" for other, "conforming" instances of the product. When conforming goods are not available in stock but are available for the dealer to purchase (usually on the open or "spot" market), the buyer may require that the seller obtain the goods elsewhere, even at a higher price, with the seller having to incur a loss equivalent to the price difference. If the vendor still does not or cannot provide the goods and the dispute proceeds to litigation (as opposed to renegotiation or settlement), then as in all cases of vendor breaches of contract, the buyer may recover only the damages that s/he would have suffered had s/he taken all feasible steps to minimize ("mitigate") his/her damages suffered. As a default rule, the perfect-tender rule may be "contracted around" in ways that specify or limit a buyer's remedies (and that accordingly reduce the market price that rational buyers are willing to pay for the goods). In many cases, the

vendor In a supply chain, a vendor, supplier, provider or a seller, is an enterprise that contributes goods or services. Generally, a supply chain vendor manufactures inventory/stock items and sells them to the next link in the chain. Today, these term ...

will not provide a refund but will provide store credit. In the cases of

software Software consists of computer programs that instruct the Execution (computing), execution of a computer. Software also includes design documents and specifications. The history of software is closely tied to the development of digital comput ...

movies A film, also known as a movie or motion picture, is a work of visual art that simulates experiences and otherwise communicates ideas, stories, perceptions, emotions, or atmosphere through the use of moving images that are generally, since ...

, and other

copyright A copyright is a type of intellectual property that gives its owner the exclusive legal right to copy, distribute, adapt, display, and perform a creative work, usually for a limited time. The creative work may be in a literary, artistic, ...

ed material, many vendors will offer only a direct exchange for another copy of the same title, with the effect that the initial transfer or license of intellectual-property rights is preserved. Most stores require proof of purchase and impose time limits on exchanges or refunds. Some larger

chain stores A chain store or retail chain is a retail outlet in which several locations share a brand, central management and standardized business practices. They have come to dominate many retail markets, dining markets, and service categories in many pa ...

, such as F.Y.E., Staples, Target, or

Walmart Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores in the United States and 23 other ...

, will, however, do exchanges or refunds at any time, with or without proof of purchase, although they usually require a form of picture identification and place per-transaction and/or per-person quantity or dollar limitations on such returns.

United Kingdom

In the UK, consumer law has moved away from the ''caveat emptor'' model, with laws passed that have enhanced

consumer rights Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent businesse ...

and allow greater leeway to return goods that do not meet legal standards of acceptance. Consumer purchases are regulated by the

Consumer Rights Act 2015 The Consumer Rights Act 2015 (c. 15) is an act of Parliament of the United Kingdom which consolidates existing consumer protection law legislation and also gives consumers a number of new rights and remedies. Provisions for secondary ticketi ...

, whilst business-to-business purchases are regulated by the

Sale of Goods Act 1979 The Sale of Goods Act 1979 (c. 54) is an Act of the Parliament of the United Kingdom which regulated English contract law and UK commercial law in respect of goods that are sold and bought. The Act consolidated the original Sale of Goods Act ...

. In the UK, consumers have the right to a full refund for faulty goods. However, traditionally, many retailers allow customers to return goods within a specified period (typically two weeks to two months) for a full refund or an exchange, even if there is no fault with the product. Exceptions may apply for goods sold as damaged or to clear. Goods bought through "distance selling," for example online or by phone, also have a statutory "cooling off" period of fourteen calendar days during which the purchase contract can be cancelled and treated as if not done. Although no longer applied in consumer law, the principle of ''caveat emptor'' is generally held to apply to transactions between businesses unless it can be shown that the seller had a clear information advantage over the buyer that could not have been removed by carrying out reasonable

due diligence Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care. Due diligence ...

Variations

''Caveat venditor''

''Caveat venditor'' is

for "let the seller beware." In the landmark case of '' MacPherson v. Buick Motor Co.'' (1916), New York Court Appeals Judge

Benjamin N. Cardozo Benjamin Nathan Cardozo (May 24, 1870 – July 9, 1938) was an American lawyer and jurist who served on the New York Court of Appeals from 1914 to 1932 and as an Associate Justice of the Supreme Court of the United States from 1932 until his deat ...

established that privity of duty is no longer required in regard to a lawsuit for

product liability Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause. Although the word "product" has ...

against the seller. This case is widely regarded as the origin of ''caveat venditor'' as it pertains to modern

tort A tort is a civil wrong, other than breach of contract, that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with cri ...

law in US.

''Caveat lector''

''Caveat lector'' is a Latin phrase meaning "let the reader beware". It means that when reading something, the reader should take careful note of the contents, and undertake due diligence on whether the contents are accurate, relevant, reliable and so forth.

''Caveat auditor''

Another variant is ''Caveat Auditor'', or "let the listener beware", where caution is urged regarding all messages, in particular spoken messages, such as a radio advertisement.

References

Bibliography

*Hamilton, W.H. "The Ancient Maxim ''Caveat Emptor''" (1931) 40 ''Yale Law Journal'' 1133, argues that ''caveat emptor'' never had any place in Roman law, civil law, or ''

lex mercatoria (from Latin language, Latin for "merchant law"), often referred to as "the Law Merchant" in English, is the body of commercial law used by merchants throughout Europe during the Middle Ages, medieval period. It evolved similar to English common ...

'' and was probably a mistake when implemented into the common law. Rather, there was a duty of

good faith In human interactions, good faith () is a sincere intention to be fair, open, and honest, regardless of the outcome of the interaction. Some Latin phrases have lost their literal meaning over centuries, but that is not the case with , which i ...

.
''MacPherson v. Buick Motor Company'' (Opinion of the Court)

External links

*
From Caveat Emptor to Caveat Venditor - a Brief History of English Sale of Goods Law
{{United States contract case law Latin words and phrases Legal rules with Latin names Legal doctrines and principles