Caveat emptor
Caveat emptor meaning
Caveat emptor means let the buyer beware. It is a well-known concept of common law known as "caveat emptor," which literally translates to "let the buyer beware." According to this principle, it is the responsibility of the buyer to research the title to the item before acquiring it. Yet, under common law, the seller has an obligation to reveal any flaws in the title to the property.
The 19th century was characterised by the “Freedom of Contract” and Caveat Emptor” – buyer beware. Its purpose was to ensure competition within the market place and protecting competitors, rather than the consumer. There was not much legislation, therefore the common law was important, and the onus was on the purchaser.
Caveat emptor in English Law
The fundamental rule of English law is expressed in the principle nemo dat qoud non habet "no one gives what they do not have." This principle or guideline is also known as the "nemo dat" principle or rule. It is the process of determining if a person who claims to be able to give or sell property really has the legal title or permission to do so. This law is premised on the notion that the purchaser cannot enhance their title status beyond that of the seller. For instance, if a rogue who steals a car and purports to sell it to an unsuspecting purchaser will not, in the ordinary case, pass title to the car. The unfortunate buyer will be left to a remedy in damages against the rogue, and the true owner will be entitled to recover the car on an action for conversion under the Torts (Interference with Goods) Act 1977.
In Bishopgate Motor Finance Corporation Ltd v Transport Brakes Ltd [1949] 1 KB 332 (CA), Lord Denning recognises throughout the evolution of our legal system, two concepts have vied for dominance.
The first is for the preservation of property: no one can provide a greater title than he holds himself.
The second is for the protection of business transactions: whoever acquires property in good faith and for value without notice shall have a clear title.
According to the nemo dat principles, there is a proper balance between the protection of the genuine owner of the products and the protection of the innocent purchaser.
Sale of Goods Act 1979
The nemo dat rule has been given statutory force and is now found in section 21 of the Sale of Goods Act 1979, which provides that:
“where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.”
Origins of Caveat emptor
The doctrine of caveat emptor dates back to ancient Roman law and was later adopted by English common law. Under this principle, the buyer assumes the risk and responsibility of determining the quality and suitability of the goods or services purchased. This principle was founded on the understanding that sellers may not always disclose all information about a product, and therefore, it is incumbent on the buyer to conduct their due diligence before making a purchase. Over time, this principle has evolved, and now, sellers are required to disclose certain information about products and services under consumer protection laws. Nonetheless, the doctrine remains an essential component of contract law, especially in transactions where the parties have equal bargaining power.
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