Let the buyer or seller beware: measuring lemons in the housing market under different doctrines of law governing transactions and information

Under information asymmetry, lemons tend to be overpriced. Yet how much of an overpricing premium the lemons can command is contingent on the underlying legal institutions. A set of transaction data from Hong Kong’s housing market reveals that durable lemons are overpriced by 6.7 and 9.9 percent under the rules of “let the seller beware” (caveat venditor) and “let the buyer beware” (caveat emptor), respectively. Switching the legal regime from the former to the latter produces a 32.3 percent increase in the overpricing premium. However, this does not suggest that caveat venditor is necessarily amore efficient legal doctrine. New information disclosure institutions are emerging to deal with the lemons problem.postprin

Caveat Venditor: Products Liability and Genetically Modified Foods

Genetically modified organisms (GMOs) have become a lightning rod for conflict between farmers, corporations, shareholders, government agencies, and other concerned groups. Supporters tout GMOs as a solution to the problems of diminishing returns from traditional crop plants and the rising demand for greater quantities of food. Opponents critcize GMOs for potential toxic and allergic reactions in humans, loss of biodiversity, and pesticide and antibiotic resistance in other plants and insects. As the understanding of potential applications of biotechnology broadens, the risks and benefits of such products are being scrutinized more closely

Comments: Caveat Venditor in Maryland Condominium Sales: Cases and Legislation Imposing Implied Warranties in Sales of Residential Condominiums

The real estate market in the past decade has witnessed the increasing popularity of residential condominiums. The maze of interests involved in condominium development, sales, and ownership has prompted the General Assembly to enact stringent warranties to protect individual purchasers. This comment discusses the historical basis for these warranties and examines, from the perspective of a recent Maryland case, the complexity of litigation arising from breach of warranties in condominium construction

Vendor and Purchaser-Abrogation of Caveat Emptor in New Home Sales by Builder

Protection against latent defects exists for the purchaser of a forty-nine cent ball point pen under an implied warranty of merchantability, but no such protection prevails for the vendee of a $50,000 home in the absence of fraud, misrepresentation, or an express warranty of condition and habitability. Such is the anomaly created by the doctrine of caveat emptor, still ruthlessly applied in a majority of American jurisdictions. In two cases recently adjudicated, Elderkin v. Gaster and Smith v. Old Warson Development Co., the courts abandoned caveat emptor in the sales of new homes by builder-vendors where latent defects are at issue, adopting the civil law maxim caveat venditor

Legal Due Diligence and Virtual Law Office Services

The study of Legal Due Diligence and Virtual Law Office Services illustrates that legal due diligence in the operational dimension is a legal compliance review activity. Deontology sees justice playing this role in the commonly used terminology of Kantian's is a categorical imperative based on the principle of universalizability that greatly affects the development of the need for legal due diligence. Legal due diligence as a legal compliance review, is a means to examine legal compliance and morally accountable standards for compliance with laws and regulations relating to corporate governance activities. Utilitarians see benevolence as the central moral virtue, and legal compliance review is implemented to minimize the potential legal problems that may affect the director and/or the corporation itself. Thus, legal due diligence is as the application of the rule utilitarianism theory, which means that a business activity, to be considered as good and based on juridical morals, must be seen from the perspective of the corporate's compliance to run its business activities for the benefit of the public. Furthermore, the factors that encourage the development of legal due diligence is the implementation of disclosure principle and materiality principle. The implementation of disclosure principle and materiality principle itself is driven by the change of doctrine of caveat emptor into caveat venditor. The change of doctrine aims to minimize the practice of fraud which became the main cause of the U.S. stock market crash (great depression) in 1929. In addition, the shift of corporate governance model from contractarian approach or shareholder approach into the company as corporate citizenship or team production is also a factor that encourages the development of legal due diligence. Keywords: Virtual Law Office,  Legal Services, Legal Due Diligenc