Caveat emptor

Caveat emptor (Latin for let the buyer beware ) is a legal principle that the purchase contract, the buyer bears the risk that the purchased item is free of open material and legal defects. Could they recognize the purchaser, a warranty from the seller is excluded.

General

The purchase contract law must provide for a distribution of risk between buyers and sellers worldwide. In Roman law, the buyer had no obvious defects warranty claims against the seller, because it was the principle of caveat emptor ( " the buyer is vigilant ' ). The buyer was alone responsible for whether he received defect-free goods. According to this legal principle one should be rewarded, which has achieved through its own efforts or their own intelligence in a knowledge advantage. Here, the seller may not behave actively deceptive, however.

German commercial law

The German commercial law is, however, based on the principle that the buyer neither an obligation nor shall an obligation to examine the object of purchase. Pursuant to § 437 BGB, the buyer may require for defective goods subsequent performance, withdraw from the contract, reduce the purchase price or claim damages. This assumes, however, that the buyer of the defect of the goods is neither known nor unknown gross negligence ( § 442 para 1 BGB). Exists under the common usage a duty to examine on the buyer side and refrain from this, it is assumed that gross negligence. Even after the reform of contract law in January 2002, § § 434, § 435, § 437, § 442 BGB, according to the principle of caveat emptor is not clearly taken over.

It is important to distinguish between open and hidden and fraudulent concealment of defects ( poor performance ). Can be charged to the purchaser thereof only open defects which are known or unknown accused him. Latent defects play only with the commercial department ( § 377 HGB ) play a role, fraudulent concealment always lies with the seller.

Anglo-Saxon Sales Law

" May the careful buyer " is an Anglo-Saxon " common law " in particular on corporate acquisitions applied rule of law. After that, it is the buyer's risk, to capture all the goods concerned, the circumstances and to identify any deficiencies. The risk is thus initially with the purchaser, who enjoys no legal protection. Therefore, it is international practice of minimizing the due diligence the buyer risk or even mutually exclusive. The principle is being applied to other objects of purchase. Here, the seller may the circumstances known to him - as in German law - but not silent.

Even in Germany, see Acquisitions usually not without due diligence tests. According to the prevailing opinion and held that the due diligence therefore not part of common usage. You should also not just turn off the supposed buyer risk, but is primarily determining the purchase price.

In many states, the law now provides that a product must have " marketable quality," or even prescribes a minimum warranty period for certain product classes. Quality, however, can still not always in any case or for each product prescribe by law. Therefore, buyers are still well advised to be cautious.

Economic dimension

No matter for which risk distribution results in a jurisdiction, has determined it is in the principle of caveat emptor ultimately a risk allocation with unequal distribution of information between buyers and sellers (information asymmetry), which can lead to a different buyer affection. An information asymmetry exists whenever a market participant has an information advantage over other players. When the seller is usually the case, because he already knows their properties through possession of the thing. After Thomas wineries with low ( high ) security requirements by buyers with low ( high ) expected damages to the low ( high ) price under the maxim Caveat emptor are in demand. Because the buyer weighs the price and the expected defects in the goods against each other and has an interest in preventing the occurrence of losses or to limit the extent of damage.

Trivia

The Birds ( The Birds; U.S. premiere on March 28, 1963) is Caveat emptor in the Alfred Hitchcock classic of lawyer Mitch Brenner cites as his mother Lydia thought that their chicken, the chicken feed bought from her not want to eat. " Caveat emptor, Mother, let the buyer beware " ( " Caveat emptor, Mother, the buyer has to be careful .")