What is caveat emptor?

 

Caveat emptor (or 'buyer beware') is an ancient cornerstone of the law in England and many other jurisdictions.

It means that it is up to those purchasing goods and property to make sure they are free from defects and fit for purpose. If any such problems come to light once the transaction has taken place the law will not step in to help the buyer.

Examples through history

An early illustration of this principle relates to the 1523 sale of a horse which could have been either tame or “wylde”.  In the second case the seller would not be responsible, as: 'caveat emptor beware thou byer'.

A more recent example is the 2004 case of Sykes v Tyler Rose. A couple in Yorkshire discovered via a TV documentary that the previous occupant of their house had brutally murdered his adoptive daughter there.

They took the seller to court, claiming that they should have been told this before the sale. The judge was sympathetic but rejected their claim - it was up to them to find out about the house’s history if this was important to them.

Are there any exceptions?

In the past caveat emptor was only departed from in very limited circumstances:

  • Misrepresentations (false statements): by the seller about their goods, including changes of circumstances that rendered their original description of the goods incorrect
  • In contracts 'uberimmei fidei' (of the utmost good faith): like those between solicitor and client, trustee and beneficiary or bank manager and client

Unsurprisingly caveat emptor is often considered harsh on buyers. In recent years consumer protection laws have made big inroads into the principle.

The most significant of these is the Sale of Goods Act 1979 (as amended). This gives buyers a remedy (like a refund, replacement or damages) if they are sold goods which are not of satisfactory quality, consistent with their description and fit for purpose.

However, there are many exceptions to the Act, notably:

  • Auction sales (in most cases)
  • When the seller is a private individual
  • Sale of real estate

In property transactions, the seller only has to disclose latent defects (those that the buyer could not find out for themselves). This is why house transactions involve such detailed due diligence including title searches, surveyors’ reports and questionnaires for the seller.

The future of caveat emptor

The importance of this principle has significantly decreased over the years through efforts to protect buyers. However, it remains the default position for many contracts, especially in property purchase.

In the UK and EU, legislators tend to adopt a pro-buyer stance. It is likely that future laws will continue to chip away at what remains of the caveat emptor rule.

However, in times such as now when we are trying to promote house buying to drive the economy it is vital that you fully understand this principle. Professional conveyancing solicitors will try to ensure you know everything there is to know about the property, so if you are thinking of using a solicitor call us and we will be able to help.

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