Caveat
Categories: Education, Financial Theory, Trading
It's a distant cousin to those little fish eggs you put on tiny pancakes with a dash of creme fraiche.
Or not. A caveat is a warning or caution in a statement or legal contract...something that is an exception that you need to be aware of.
Say you’re a landlord and a lawyer is reviewing something for you, a lease draft for example. The lawyer might outline the terms to you, and then point out a loophole: “To break the lease, the tenant must give you 60-days notice, the caveat being that, if the conditions are unacceptable, they can leave with no notice at all.” The lease is outlining a loophole or side note, the lawyer is advising you of it. Either way, that provision or exception to the rule you need to be aware of...is a caveat.
As with caviar, there are different flavors. There's caveat emptor ("buyer beware"). There's caveat venditor ("seller beware"). And there's caveat subscriptor, which splits the difference somewhat by warning all the signers of an agreement to, uh...look out.
