I have read Peter Huber's Liability a number of times, and have always found it an interesting, and often amusing, look at the absurdities of our system of liability law. (Or the system as it stood in the late 1980's. It has gone downhill since.)However, one thing Huber wrote always troubled me, and that was his contention that caveat emptor may have made sense in an older, less affluent age, but we could easily adopt another assumption and continue to function. Of course, Huber is in favor of contractual assignment of liability (cf "In Praise of Contracts"), so the underlying premise in his mind is simply the catch-all for cases falling through the contract, but I would still argue he is wrong in this one case.

Caveat emptor is a very simple principle. It says, in the simplest terms, if you buy X from me, then all I sell you is X. Any injuries you may suffer are your responsibility. You buy only what the contract explicitly states. So, if I say "You buy this brick", and the brick later crumbles and your house falls down, unless I warranted the brick to hold up for so many days, or to so much weight, you are out of luck.

It was a hard principle, the outcomes could often seem unfair, but it was a logical outgrowth of our contract law. Under contract law, the basic principle was that it created private law between two parties, and that it was not subject to review by the courts, except in a few very specific circumstances (eg contracts contrary to criminal law). Otherwise, the courts would just enforce the contract as written, provided it met the bare minimum requirements of offer, acceptance and consideration. Thus, it made snese to employ the principle of caveat emptor, as the most literal reading of the contract was that it sold just what was named, and nothing more, not even a promise that the good was in usable condition.

In practice, contract laws were never quite this clear cut. From the first courts began to read in guarantees. Merchants who regularly sold goods were assumed to imply the goods they sold were of a specific quality. Likewise, certain categories of goods began to be assumed to have certain implicit promises as well. And property, with a law all its own thanks to holdovers from feudal law, as well as other considerations, carried with it many implied promises as well.

And all of that was before the radical changes took place changing contract law into contorts, and liability law into the liability lottery. 

But I am not concerned here with what is, but what should be, and specifically why caveat emptor is the only practical way to read a written contract.

Logically, there is no difference between a system which assumes an offer to sell X implies no warranty, unless one is spelled out, and one which assumes it implies a warranty of a specific kind, which can be removed through an additional clause. However, there are a few reasons the two systems are not as identical as logic would suggest.

First, and most simply, because it starts the process from which we now suffer, the erosion of contracts. Should we be fortunate enough to move back to fully binding contracts, I would be horrified to adopt as an assumption the belief that contract mean more than they say. Yet that is precisely what the warranty option does, assume a contract implies something it does not say, in other words, already beginning to gut contract law.

Second, and more importantly, we can assume everyone knows contract law, but many people draw up contracts for private sales without knowing contract law. And we should encourage this. The more contract law is used, the less torts will be, and the more rapidly cases can pass through the courts, or avoid court entirely. So contract law should assume those writing know what an average educated soul would know, and no more. And implicit warranties go beyond that, meaning many people may sell more than they intended, when an implied contract is read into the document.

Third, and related to the second, there is one additional problem with such assumptions, and that is that they change over time. What if the implied warranty when I sold it was A, but is now B? Does the law give you implied warranty A or B? OR, to make it more complex, assume you leased X from me, when the implied warranty was A,  it changed to B, and we then extended the lease afterward. Does warranty A or B govern? Could those making such contracts even know? Is it not better and mroe certaint o say they simply sold a good, and whatever warranties explicitly exist in the contract, and nothing more?

And no, those "No warranty express or implied..." clauses do not work as a substitute for caveat emptor. As any liability lawyer will tell, that sort of boilerplate is read out of contracts routinely through a variety of legal legerdemain. In addition, even if it is a valid disclaimer today, the courts of tomorrow may decide otherwise.  (Again, as many businesses have learned to their discomfort.) Thus, the only certain way to protect against expansive liability is to enshrine caveat emptor as the basic principle of contract, anything else bears far too many risks.