The doctrine of caveat emptor—that the buyer is responsible for checking the quality of goods before purchase—typically comes into play when one individual buys property or an item from another individual. For example, if someone buys a mug at a garage sale and then discovers that the mug has a leak, the buyer could very well have no recourse or legal right to demand a refund because they should have inspected the mug carefully before buying it. Another example might involve someone who buys a car from another person. The buyer test-drives the vehicle and has it inspected before buying. Several days later, the car's engine dies. Since the buyer test-drove the vehicle and had it inspected, and assuming that that seller did not commit fraud or have reason to believe that the engine was about to die, the buyer might not have any recourse.
There are several exceptions to the doctrine. The most common exceptions include fitness of the product for the buyer's purpose, goods sold by description, goods of merchantable quality, sale by sample, usage of trade, and fraud or misrepresentation. The doctrine of caveat emptor does not normally apply if the seller intentionally hid defects or made fraudulent misrepresentations. In addition, if someone buys goods that match the seller's description of those goods, then the doctrine does not apply. When a buyer tells a seller why the goods are needed and relies on the seller's skill or judgment, then, again, caveat emptor is not applicable.In order to better protect buyers, the doctrine of caveat emptor is still in use, but it has been somewhat weakened and diluted. After World War II the residential real estate market experienced exponential growth. In an attempt to protect these new buyers, advocates argued in favor of implied warranties which weakened the doctrine. As a result most jurisdictions do not apply the doctrine to the sale of real property in recognition that buyers and sellers are in different bargaining positions. Many sales fall under the doctrine of caveat venditor, meaning "let the seller beware," because many goods are covered under an implied warranty of merchantability. In other words, courts are likely to rule that a product should actually be what its seller claims it is.