This is the first in a series of posts aimed at helping Zimbabwean consumers educate themselves. If you have any suggestions on subjects or terms you find confusing or pertinent, please do not hesitate to contact us.
What Does Caveat Emptor Mean?
A Latin phrase for “let the buyer beware.” The term is primarily used in real property transactions. Essentially it proclaims that the buyer must perform their due diligence when purchasing an item or service.
Consumers need to know their rights and be vigilant in avoiding scams. For example in the private purchase of a used car, caveat emptor places an onus on the buyer to make sure the car is worth the purchase price. This is because once the transaction is complete the buyer will not receive a warranty or return option from the seller.
What Does Due Diligence Mean?
1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to a sale.
2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party.
Offers to purchase an asset are usually dependent on the results of due diligence analysis. This includes reviewing all financial records plus anything else deemed material to the sale. Sellers could also perform a due diligence analysis on the buyer. Items that may be considered are the buyer’s ability to purchase, as well as other items that would affect the purchased entity or the seller after the sale has been completed.
Due diligence is a way of preventing unnecessary harm to either party involved in a transaction.
What Does Warranty Mean?
A type of guarantee that a manufacturer or similar party makes regarding the condition of its product. It also refers to the terms and situations in which repairs or exchanges will be made in the event that the product does not function as originally described or intended.
Warranties usually have exceptions that limit the conditions in which a manufacturer will be obligated to rectify a problem. For example, many warranties for common household items only cover the product for up to one year from the date of purchase and usually only if the product in question contains problems resulting from defective parts or workmanship.
As a result of these limited manufacturer warranties, many vendors offer extended warranties. These extended warranties are essentially insurance policies for products that consumers pay for up front. Coverage will usually last for a handful of years above and beyond the manufacturer’s warranty and is often more lenient in terms of limited terms and conditions.