Sunday, 27 December 2009

What is Caveat Emptor ?

The principle of caveat emptor (let the buyer beware) means that the purchaser is assumed to purchase the land or property in its condition at the date of the contract, regardless of what the buyer actually knows about the property. The responsibility for finding out about the property lies with the purchaser so it is the purchaser ( =though his advisers ) who submits pre-contract enquiries with the vendor.

Whether or not the purchaser raises enquiries, the vendor is legally compelled to disclose latent encumbrances and defects in title, unless the contract says otherwise.

The vendor's duty does not extend to disclosure of physical defects and the vendor is not required to disclose anything that is already in the purchaser's knowledge. It is generally unwise for the vendor to assume that the buyer has actual knowledge.

The purchaser's remedies for incorrect or incomplete replies

Subject to the terms of the conveyancing contract, the purchaser has no remedy against the seller for incorrect or incomplete replies unless the buyer can successfully establish that there has been some misrepresentation. A legal misrepresentation requires:

-An untrue statement of fact by the vendor.
-Reliance on the statement by the seller, inducing it to enter into the contract.
-Loss suffered by the buyer as a result of entering into the contract.

Preparing replies in advance of the pre-contract enquiries being raised

Although usual for the purchaser to raise pre-contract enquiries with the vendor, in some circumstances it may be appropriate for the vendor to supply replies to anticipated pre-contract enquiries.

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