Caveat emptor is Latin for "let the buyer beware".
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. When making a purchase, always check the return policy and if you do not like the stores policy, vote with your feet and take your business elsewhere.
This phrase has given rise to many informal variations, such as caveat reader (properly, caveat lector).
See also