Generally Caveat Emptor was the property law doctrine that controlled the sale of real property after the date of closing. Under the doctrine of Caveat Emptor, the buyer cannot recover from the seller for defects on the property that renders the property unfit for ordinary purposes. The only exception was if the seller actively concealed patent defects. The modern trend, however, is one of the Implied Warranty of Fitness that applies only to the sale of new residential housing by a builder-seller and the rule of Caveat Emptor applies to all other sale situations (i.e. homeowner to buyer)

Before statutory law, the buyer had no warranty of the quality of goods. In many jurisdictions, the law now requires that goods must be of "merchantable quality". However, this implied warranty can be difficult to enforce, and may not apply to all products. Hence, buyers are still advised to be cautious.

In addition to the quality of the merchandise, this phrase also applies to the return policy. In most jurisdictions, there is no legal requirement for the vendor to provide a refund or exchange. In many cases, the vendor will not provide a refund but will provide a credit. In the case of software, movies and other copyrighted material many vendors will only do a direct exchange for another copy of the exact same title. Most stores require proof of purchase and impose time limits on exchanges or refunds; however, some larger chain stores will do exchanges or refunds at any time with or without proof of purchase.

This phrase has given rise to many informal variations, such as caveat reader (properly expressed in Latin as caveat lector.)

Caveat emptor has also been used by software documentors to entitle their collection of software functioning oddities or stumbling blocks in usage.