Caveat emptor misrep

No duty to volunteer, a false answer = misrepresentation, latent-defect/title exceptions, the resale regime.

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Question 1

A completed terrace house has a persistent damp problem in the master bedroom that the seller, Mr Ho, has papered over. During a viewing the buyer's agent asks Mr Ho's agent directly whether there is any water seepage. Mr Ho's agent knows about the damp but wants to avoid killing the deal. The buyer later discovers the seepage and threatens action.

Consider the following statements.

(i) Under caveat emptor, the seller generally has no positive duty to volunteer defects to the buyer.
(ii) If the agent affirmatively lies about the seepage when asked, that can amount to misrepresentation.
(iii) A latent defect the seller knew of and concealed can fall within an exception to caveat emptor.
(iv) Because caveat emptor applies, the agent may safely give a false answer to a direct question.

A. (i) and (iii) only
B. (i), (ii), (iii) and (iv)
C. (i), (ii) and (iii) only
D. (ii) and (iii) only

Show the answer and full explanation

Answer: C

The rule. Caveat emptor means the seller has no general duty to volunteer defects — but it never licenses lying. A false answer to a direct question is misrepresentation, and a concealed latent defect the seller knew of is an exception to caveat emptor.

Why C is correct. (i) no duty to volunteer, (ii) the affirmative lie as misrepresentation and (iii) the concealed-latent-defect exception are correct. (iv) is false — caveat emptor does not let the agent give a false answer.

The other options.

A drops (ii), the misrepresentation point.
B adds the false (iv), the licence to lie.
D drops (i), the no-duty-to-volunteer point.

Exam note. Caveat emptor is no shield for lies. The agent may decline to answer, but must never answer falsely.

Caveat emptor means the seller has no general duty to volunteer defects →

Question 2

Advising a buyer who found a defect after completion, an agent works through the situations in which the general rule of caveat emptor gives way — and is careful not to treat a signed estate agency agreement, which has nothing to do with the exceptions, as one of them.

Consider the following statements.

(i) There is a latent defect that the seller knew about but concealed.
(ii) An estate agency agreement has been signed in respect of the transaction.
(iii) The seller (or agent) makes a misrepresentation to the buyer.
(iv) There is a defect in the seller's title to the property.

A. (i), (ii) and (iv) only
B. (ii), (iii) and (iv) only
C. (i), (ii), (iii) and (iv)
D. (i), (iii) and (iv) only

Show the answer and full explanation

Answer: D

The rule. Caveat emptor gives way where: the seller concealed a latent defect he knew of; the seller or agent makes a misrepresentation; or there is a defect in the seller's title. A signed estate agency agreement is not an exception to caveat emptor.

Why D is correct. (i) the concealed latent defect, (iii) the misrepresentation and (iv) the title defect are recognised exceptions. (ii) is false — an agency agreement is not an exception.

The other options.

A adds the false (ii), the agency agreement.
C adds the false (ii) as part of an all-four set.
B adds the false (ii) and drops (i).

Exam note. Exceptions to caveat emptor: concealed latent defect, misrepresentation, title defect. An agency agreement is not one.

A signed estate agency agreement is not an exception to caveat emptor →

Practise it under exam conditions

Single questions test whether you know a rule. The paper tests whether you can find it in a scenario, at speed, with three plausible alternatives in the way. Start with the free 20-question half-paper.

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