By: Ayodeji Adimula
Oftentimes, clients purchase goods, including properties without conducting due diligence before the conclusion of a transaction. Caveat emptor simply means buyer beware and generally, the rule does not place an obligation on the seller to reveal defects in the goods or property to be sold. This doctrine is the basis for which most buyers seek contractual protection, in the form of warranties.
In a sales contract, the law requires that goods proposed for sale must be without defect. Where defective goods are sold to the buyer, it is entitled to claim remedies against the seller. It is an important rule of law that the buyer is entitled to ensure the fitness of goods for its particular purpose and in absence of any requisitions by the buyer, the seller cannot be held liable for any loss. Thus, the seller is not obligated to make disclosure of defects in the goods in the absence of any query by the buyer. The principle goes further to imply that in the absence of proper investigations and a buyer purchases a property with a defective title, or goods with defects, the buyer will not be able to recover damages from the seller.
To ensure the fitness of goods and that a property exists without defects, a buyer must carry out his own investigation, independent of the seller. The following are some of the steps to be taken before a property is purchased in Nigeria:
- engage the services of a solicitor who will carry out searches on the property, investigate the title documents and determine whether or not the property is fit for its intended purpose.
- survey the property with a licensed surveyor
- request to see the original documents
The legal implication of purchasing a property or goods under a sales contract without the services of a solicitor cannot be overemphasized. For instance, there could be a pending litigation on the property or the property may be unsuitable for the purpose for which it was intended. It is therefore necessary for a buyer to engage the services of a solicitor to ensure that there are no encumbrances, restrictions, reservations or defects in any of the transaction documents or the vendor’s title.
So also, for defective goods purchased without due diligence, the buyer will have no recourse to the law to remedy the situation since equity aids the vigilant and not the indolent. On the other hand, a warranty clause allows the buyer to claim damages against the seller in the event of sale of defective goods. However, warranty clauses do not excuse a buyer’s failure to exercise due diligence before the purchase of goods. Hence, even though the seller does not have an obligation to disclose defects to the buyer, the seller must make full disclosure where there are requisitions from the buyer. Under the caveat emptor rule, an action for breach of contract requires an express warranty, in the absence of which only an action for fraud can be maintained in the court of law. The same applies to purchase agreements made without warranty clauses.
There are certain exceptions to the principle of caveat emptor:
- fitness for buyer’s purpose
- goods sold by description are presumed to correspond with the description
- implied condition that goods sold in the course of business are of merchantable quality
- implied conditions that goods sold by sample will correspond with the bulk delivered
- fraud or misrepresentation by the seller.