According to Statistics Canada, the six most common spoken languages in Canada are English, French, Spanish, Italian, German and Chinese but there are a couple of Latin words you should know something about.

Caveat emptor means ‘Let the buyer beware’ and I touched on this last time. These are two little words that will have you pulling your hair out at some point in your lifetime. Let me shed some light on what they mean and what you can do to prepare yourself for this inevitable phrase that protects the seller – not the buyer.

Statue weights

This legal principle has been part of the English language since 1523, when it was used in connection with the sale of a horse, “which might have been ridden upon and be tamed or might be wylde. If wylde, it was not the merchant who had to beware, but caveat emptor be ware thou buyer.”

The principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made is what makes this principle different from the dozens of consumer protection laws now in existence.
In a 1995 Supreme Court of Canada case, Winnipeg Condo #36 v Bird Construction, the Court adopted these words in upholding the principle in property law:

“The doctrine of caveat emptor has lost little of its pristine force in the sale of land and dictates that, in the absence of an express warranty, there is no implied warranty of fitness for human habitation upon the purchase of a house already completed at the time of sale. The maxim operates as between purchaser and vendor and instructs the potential purchaser to rely upon his own investigations, inspections and inquiries.”

In other words, if the buyer has the opportunity to undergo their own due diligence in determining the quality of the property being purchased, then they will be responsible to uphold their side of the contract even if later the property is found to be unsuitable.

Many clients of mine find themselves in a frustrating position when it comes to financial products and this principle. While it may not seem reasonable that someone can understand a 10 page prospectus or the terms of a complicated investment product, just because they have the opportunity to do so, they will be held to the terms.

When a contract is signed between a buyer and a seller, and the buyer had the opportunity to review the terms and conditions – including seeking legal assistance if warranted – then after a reasonable period of time (called a cooling period of generally 7-10 days), they will be held to the terms of the contract. The one exception is of course if there are misrepresentations that can be proven to equate fraud.

Canada has been applauded internationally for setting up a financial literacy task force to try to educate the ‘emptor’ (the buyer). While this is a step in the right direction, it doesn’t acknowledge the complexity of the financial products now available, and that at times are sold aggressively.

How do we protect ourselves? Here’s some advice from our own Canadian government’s website:

“When you purchase a car, a new cellphone, hire a painter or mover, or purchase insurance you are entering into a contract.
Before signing a contract there are a few things to keep in mind:
• Always read the contract carefully, including the fine print.
• Only sign if you understand and agree with everything in the contract.
• Check carefully what you are responsible to pay and what the company must provide.
• When possible, and especially for a very large purchase, have a trusted person review the contract before you sign.
• Research the company and find references. The Better Business Bureau may be able to help you.
• If there is a deposit required, make sure you understand:
– if the amount of money deposited will go toward the final purchase price of the item; and,
– what will happen to the deposit if you cancel the contract.”

While this is good rational advice that we should all heed, it is inevitable that at some point we’ll bump into the consequences of Caveat Emptor. And you won’t be alone as you consider pulling out your hair in frustration!