What Is Caveat Subscriptor?
Caveat subscriptor is a Latin term used in trading to mean “let the seller beware” and in legal language to refer to the obligations of a contract signer. Caveat subscriptor is also referred to as “caveat venditor.”
- Caveat subscriptor is a Latin term used in trading to mean “let the seller beware” and in legal language to refer to the obligations of a contract signer.
- When signing a contract, the individual automatically agrees to the conditions stated within it, regardless of whether they have read and/or understood them.
- Caveat subscriptor also states that the seller has an obligation to provide the goods or services indicated and is entering into the contract at their own risk.
- The term is used alongside caveat emptor, Latin for “let the buyer beware,” to warn each side of a securities trade of overly risky, inadequately protected markets.
Understanding Caveat Subscriptor
The literal Latin definition of subscriptor is “signer” and the Latin for seller is “venditor.” Using “subscriptor” to refer to a seller likely derives from its use in contract law.
A contract is typically an agreement between two parties relating to the exchange of goods or services. In contract law, caveat subscriptor generally refers to the notion that when an individual signs a contract, they automatically agree to the conditions stated within it, regardless of whether they have read and/or understood them or not.
It is common for language to appear above the contract signer’s signature stating that the signer has read and agrees to the terms of the agreement/contract. By signing on the dotted line, the signer fully consents and waives the right to claim they were unaware of the terms. In other words, if the signer later complains that the contents of the contract are not to their liking, they can do little about it.
It is generally accepted that contracts should be written up in plain, easy to understand language in order to reduce the risk of the other party agreeing to something it does not fully comprehend.
Meanwhile, in terms of buyer and seller language, caveat subscriptor states that the seller in a transaction has an obligation to provide the goods or services indicated and is entering into the contract at their own risk.
Examples of Caveat Subscriptor
Frank sells a car to Jim after promising him that it is in good condition and running smoothly. Jim pays Frank and then attempts to drive the car away, but is unsuccessful as the car will not start. In this case, under the caveat subscriptor concept, Frank is responsible for repairing the car.
Another example may be a fast market when sellers and buyers are accepting more risk that market order stock trades will execute at much higher or lower prices than a recent quote.
Caveat Subscriptor vs. Caveat Emptor
Caveat emptor, Latin for “let the buyer beware,” is the reverse of caveat subscriptor.
The two terms are used in securities trading alongside each other to warn, as Nasdaq puts it, “of overly risky, inadequately protected markets,” on both sides of a trade. In a sense, the securities dealer is telling both traders, the buyer and the seller, that the risk in a particular market is theirs, not the dealer’s.
In some cases, the caveat subscriptor rule may be voided if foul play, such as misrepresentation, fraud, and duress, can be proved.
For example, an individual may no longer be liable to respect the terms of a contract they signed if it becomes clear that crucial information was omitted. Alternatively, if Frank did not state that the car he sold Jim was in perfect working order in writing, there might be no evidence that such a claim was made.
View more information: https://www.investopedia.com/terms/c/caveat-subscriptor.asp