A latent defect is a hidden defect which could not be uncovered during a routine inspection process. The opposite of a latent defect is a patent defect, a defect which is visible during a successfully conducted inspection. Latent defects can become a point of contention in liability law, depending on a number of different circumstances surrounding the defective object. Since people can't find these problems until after they buy a product, they can be a problem for the buyer.
As a general rule, when people buy new products, the understanding is that they buy with an awareness of any existing defects or problems. Any breakage or other issues are thereafter the responsibility of the buyer. This is based on the assumption that if the product had patent defects, the buyer had the opportunity to refuse the purchase. All of this changes with latent defects. In this case, the buyer had no way of knowing about the defect because destructive, unusual, or laborious testing techniques might have been needed to uncover it.
In some cases, a seller may be considered liable for latent defects. Protection against latent defects is often written into sales contracts, spelling out the situations in which the seller will be obligated to replace or repair the damaged object. For example, if a the transmission in a newly purchased car fails after 100 miles, the dealer would likely be responsible for this latent defect.
If there is no clause in the contract specifically addressing latent defects, the buyer may have to take legal action to recover damages from the seller. In this situation, the ruling can go in a number of ways. If the buyer can prove that the seller knew about the defect and did not disclose it, this is misrepresentation, and the buyer will probably win the suit. Likewise, if a seller tries to conceal a patent defect, this is also misrepresentation. If the seller can prove genuine innocence, however, or he or she can show that the buyer was aware of the latent defect, the case may be decided in favor of the seller.
Latent construction defects are an example of an especially costly type of defect which can plague some businesses. Several insurance companies actually offer latent defect insurance, providing protection for policyholders such as businesses and building owners. In this case, the insurance will pay out if a latent defect causes problems, compensating buyers or sellers for losses caused by poor construction. The insurance will usually encourage the customer to file suit before filing an insurance claim in the hopes of making the builders pay out for the damage.