Caveat Emptor is a Latin term which means " let the buyer beware". The phrase is sometimes used in English proverbs and is also used in some legal contracts as a type of disclaimer. Caveat emptor is a contract law principle that places the onus on the buyer to perform due diligence before making a purchase. The term "caveat emptor" is used in a real property transaction as it relates to the sale of real estate property after the day of closing; it also applies to the transaction of other goods such as a car. The caveat emptor was introduced to resolve the disputes which were arising from information asymmetry, i.e. a situation where the seller has more information than the buyer regarding the quality of good and service. E.g., if Riyan wants to buy a car from Alex so according to the caveat emptor principle he is responsible for gathering the information about the car to make a purchase. To gather information from Alex, Riyan may ask how many miles the car has, is there any component that needs to be replaced etc. If Riyan buys the car for the asking price and we make no effort to assess its true value and if the car subsequently breaks down, then, in that case, Alex is not technically liable for any damage under caveat emptor principle. There is a certain exception also to this principle as if Alex would have lied about the car maintenance need or mileage, then he will be considered having committed fraud, and Riyan would then be entitled to damages. Caveat emptor is important for real estate transactions. In the US home builders are required to issue an implied warranty to fitness to buyer's new properties. New residential properties come with the expectation that the seller is liable for fault.