what does caveat emptor mean 
caveat emptor is a latin phrase that translates to let the buyer beware it means that an individual buys at their own risk potential buyers are warned by the phrase to do their research and ask pointed questions of the seller the seller isn t responsible for problems that the buyer encounters with the product after the sale caveat emptor is sometimes used in legal contracts as a type of disclaimer in many jurisdictions it is the contract law principle that places the onus on the buyer to perform due diligence before making a purchase the term is commonly used in real property transactions it relates to adverse situations that may arise with real estate after the date of closing it also applies to transactions that involve other types of goods such as cars or items at thrift stores or yard sales investopedia jake shiunderstanding caveat emptorcaveat emptor is intended to preclude post purchase disputes arising from information asymmetry a situation in which the seller has more information than the buyer about the quality of a good or service for example if hasan wants to buy a car from allison and caveat emptor applies he is responsible for gathering the necessary information to make an informed purchase in gathering this information hassan may decide to ask allison how many miles the car has on it whether any major components need to be replaced whether it s been serviced regularly and more if he buys the car for the asking price making little or no effort to assess its true condition or value and the car subsequently breaks down allison is not technically liable for damages however in practice there are exceptions to this principle caveat emptor doesn t give sellers carte blanche to promote a fraudulent transaction for example if allison lied about the car s mileage maintenance history or repair needs she would have committed fraud in theory hasan would be entitled to damages caveat emptor can apply in real estate transactions involving previously owned houses in all u s states therefore buyers need to make every effort to discover any and all property defects they might hire a highly rated house inspector to help however in the majority of states this principle is not necessarily business as usual what s more within the u s home builders are required to issue an implied warranty of fitness to buyers of new properties these properties come with the expectation that the seller is liable for faults 1reducing caveat emptormarket forces and other factors can reduce the feasibility of caveat emptor in some cases for example with real estate because a seller typically knows the condition of a property better than a buyer legal decisions relating to quality issues have begun to favor the buyers 2 there are other ways that buyers can feel more assured of quality warranties are guarantees of quality or satisfaction that sellers issue voluntarily to buyers if sellers provide a quality product they will not need to provide refunds or replacements very often buyers will be inclined to choose those vendors that provide a perception of quality or a warranty there are several types of implied warranties 3these laws have been enacted for the protection of consumers buying certain goods and services especially since the 2008 financial crisis for instance financial services institutions know much more information about their products and services than their customers do this information can relate to fees responsibilities risks and benefits the truth in lending act tila requires financial services providers to inform consumers of the terms and costs of consumer credit products 4informal transactions such as the one between allison and hasan are usually unregulated however the u s government pushes back against the principle of caveat emptor to protect consumers interests in more than just the financial services industry as referred to above many other industries must provide buyers clear largely standardized information about a product or service at the same time safe harbor statements and legally mandated quarterly reports can reinforce the principle of caveat emptor many companies continue to promote the expectation that buyers have access to all the information they need to make a reasonably informed decision if you see the term as is on the tag of any item for sale caveat emptor applies be sure to examine the item carefully and to your satisfaction ask the seller questions about condition once you buy it you cannot return it for a refund states that apply caveat emptormost states don t uniformly apply caveat emptor offering buyers some assurance of product service protection however the courts in the states below still tend to uphold it for real estate transactions 1caveat emptor vs caveat venditorcaveat emptor refers to instances when buyers must be vigilant about researching the condition of an item for sale the seller has no responsibility for after sale problems that occur however a different phrase often applies to sales in the u s nowadays it s caveat venditor and it translates to let the seller beware times have changed and goods and services are often covered by an implied warranty 56unless they re labeled sold as is or some other understanding between the buyer and seller is reached most consumer products are guaranteed to function when used for their intended purpose 