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‘Caveat emptor’ is a Latin term that means "let the buyer beware." Similar to the phrase "sold as is," this term means that the buyer assumes the risk that a product fails to meet expectations or have defects. In other words, the principle of caveat emptor serves as a warning to the buyers that they have no recourse with the seller if the product does not meet their expectations.
The term actually means that ‘let a purchaser beware’, for he ought not to be ignorant of the nature of the property which he is buying from another party. The assumption is that buyers will inspect and otherwise ensure that they are confident with the integrity of the product before completing a transaction. This does not, however, give sellers the green light to actively engage in fraudulent transactions.
Under the principle of caveat emptor, a consumer purchases a coffee mug and later discovers that it has a leak he has no choice other than to keep it with him. According to their principle, the buyer should have been cautious and should have thoroughly examined the product to check the defect if any.
A more common example is a used car transaction between two private parties (as opposed to a dealership, in which the sale is subject to an implied warranty). The buyer must assume the responsibility of thoroughly researching and inspecting the car by taking it to a mechanic for a closer look before finalizing the sale. If something comes up after the sale, maybe a transmission failure or something, it is not the seller's responsibility. But ‘caveat emptor’ principle cannot be applied where the car is bought afresh as a brand new car from showroom as the deal in governed by warranty of certain years.
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