Caveat Emptor

What is Caveat Emptor?

Caveat Emptor is a Latin phrase which is interpreted as “let the buyer beware”. It describes the concept of contract law that places the burden of due diligence on the buyer of good or service. Basically, Caveat Emptor is a key principle in commerce and the contractual relationship between a buyer and a seller.

A buyer is accountable for performing the necessary due diligence before the purchase to make sure that goods are not defective and it suits everyone’s needs. In case, if the buyer fails to take any necessary actions, then, an individual will not be allowed to purchase the products that show significant defects.

Caveat Emptor Application

Caveat Emptor is applied on Real Estate transactions and the financial service Industry. Basically, it is applied to the purchase of any goods or services. The seller of the product is required to render the pertinent information about the product in the standardized form.

The caveat emptor principle does not apply when the seller gives wrong information about the product or when misleading of the product.

Caveat Emptor Example

To give a better understanding about this terms, let’s take an illustration here-

Suppose, Manish purchases a house from Akash. Before purchasing, Manish asked Akash about the defect in the house.

Akash told him about the leakage in the bathroom upstairs, but it was fixed already. He further warned him about the bathroom leakage and asked him to repair whenever it will start leaking again. But, Manish buys the house without inspecting the house.

After 5 months, there is a big leak in the bathroom and it has damaged the floor and other areas of the house. Now, Manish goes to the court to recover the damages from Akash. Although, Akash is not entitled to Manish’s loss because the caveat principle is applied.