Caveat emptor
Caveat emptor ( Latin for the buyer to be careful ) is a legal principle , according to which the buyer bears the risk of the purchase contract being free of obvious material and legal defects in the purchase contract . If the buyer was able to recognize them, the seller is not liable for defects .
General
Sales contract law must ensure that risks are shared between buyers and sellers worldwide . In Roman law , the buyer had no warranty claims against the seller in the event of obvious defects , because the principle of caveat emptor (“the buyer be vigilant”) applied. The buyer was solely responsible for ensuring that the goods were free of defects. According to this legal principle, those who have developed a knowledge advantage through their own efforts or their own intelligence should be rewarded. In doing so, however, the seller must not be actively deceiving .
German sales law
The German sales law is based on the principle that the buyer has neither an obligation nor an obligation to examine the object of purchase. According to § 437 BGB the buyer for defective purchased goods can remedy require the contract to withdraw , the purchase price mitigate or compensation demand. However, this presupposes that the buyer is neither aware of the defect in the purchased item nor is it grossly negligent ( Section 442 (1) BGB). If, at the prevailing practice a duty to examine on the side of the buyer and will refrain from this, is by gross negligence expected. Even after the law of obligations reform of January 2002, § § 434 , § 435 , § 437 , § 442 BGB, the principle Caveat emptor was clearly not adopted.
Rather, a distinction must be made between open, hidden and fraudulently concealed defects ( poor performance ). The buyer can only be charged with obvious defects that are known to him or are not known to him. Hidden material defects only play a role in commercial purchases ( Section 377 HGB), fraudulent concealment always affects the seller.
Anglo-Saxon sales law
“May the buyer watch out” is a legal principle used in Anglo-Saxon “ common law ”, particularly when it comes to company acquisitions . Thereafter, it is the buyer's risk to record all the circumstances relating to a purchased item and to identify any defects. The risk initially lies solely with the buyer, who enjoys no legal protection. It is therefore an international practice to minimize or even exclude the buyer risk through due diligence . However, the principle is also applied to other purchased items. The seller may not withhold the circumstances known to him - as in German law - however.
Even in Germany, company acquisitions usually no longer take place without prior due diligence. According to prevailing opinion and jurisprudence, due diligence is therefore not part of the traffic custom. It should not only eliminate the supposed buyer risk, but primarily serves to determine the purchase price.
In many countries, the law now stipulates that goods must be of “marketable quality” or even prescribes a minimum guarantee period for certain product classes. However, quality can still not always be prescribed by law in every case or for every product. Therefore, buyers are still advised to be careful.
Economic dimension
Regardless of which risk distribution a legal system has decided on, the principle of the caveat emptor is ultimately a risk allocation in the case of unevenly distributed information between buyer and seller ( information asymmetry ), which can lead to a different buyer propensity. Information asymmetry always occurs when a market participant has an information advantage over other actors. This is regularly the case with the seller because he already knows its properties by owning the thing. According to Thomas Wein, goods with low (high) security requirements are in demand by customers with low (high) damage expectations at low (high) prices under the maxim Caveat emptor . Because the buyer weighs the price and the expected defects of the purchased item against each other and has an interest in preventing the occurrence of damage or limiting the extent of the damage.
Trivia
Caveat emptor is quoted in Alfred Hitchcock's film The Birds (1963) by lawyer Mitch Brenner when his mother Lydia suspects that her chickens do not want to eat the chicken feed she has bought. "Caveat emptor, Mother, let the buyer beware" ("Caveat emptor, mother, the buyer must be careful".)
In Stephen King's bestseller In a Small Town (1991, original title: Needful Things ) the motto of the store in the center of the action hangs on the wall: I DO NOT ISSUE REFUNDS OR MAKE EXCHANGES CAVEAT EMPTOR! ( German There are no refunds or exchanges ).
Individual evidence
- ↑ Shirin Maria Massumi, Quo Vadis company purchase agreements , 2008, p. 157.
- ↑ Shirin Maria Massumi, Quo Vadis Company Purchase Agreements , 2008, p. 84.
- ↑ Shirin Maria Massumi, Quo Vadis company purchase agreements , 2008, p. 105.
- ↑ Shirin Maria Massumi, Quo Vadis company purchase agreements , 2008, p. 185.
- ↑ Klaus-Heinrich Liesenfeld, The pre-contractual obligation to notify in English insurance contract law , 1994, p. 18.
- ↑ Lars Remy, Due Diligence as an Instrument of Acquisition Controlling , 2011, p. 25.
- ↑ Thomas Wein, An economic analysis of the market for legal services , 1994, p. 181.
- ^ David Baggett / William A. Drumin, Hitchcock and Philosophy: Dial M for Metaphysics , 2007, p. 86.
