DEFINITIONS OF LEGAL TERMS GLOSSARY THE ON LINE LEGAL PHRASE BOOK HELLO! We try and make the tutorials and other materials as simple and easy to read as possible. Here are definitions of legal terms-- please let us know if there are more words that we should define. Agent- Someone you authorize to do something on your behalf. In some cases such agency needs to be in writing, in others it can be verbal. Common law- In merry Olde England there were two types of Courts- law and equity. In the law court, the Judge applied statutes. As time went on, situations that were not covered by statutes were uncovered, and Judges "created" law, usually in equity. Over time, the Judge made law was recorded and taught to attorneys as a part of their training. This is "common law." In all states except Louisiana, the common law of England was adopted as the general law of the state, EXCEPT when a statute provides otherwise. Thus, "common law" is used to fill in gaps. Common law changes over time, and at this time, each state has its own common law on many topics. Compensatory damages- Damages for economic losses. (As opposed to punitive damages.) Domicile- The principal place of residence of an individual. This is determined primarily by intent. A good indication of domicile is where a person registers to vote. Felony- A serious crime that upon conviction involves forfeiture of some civil rights, for example, the right to vote, to hold office and to hold many types of professional licenses. Usually involves potential punishment of death or more than one year in jail. Financing Statement- A formal notice of a lien being held on personal property, required under the Uniform Commercial Code in most cases. Also called a "UCC-1" from its form number. Hypothecation- An agreement whereby someone puts up collateral to secure the debt of another. This means that someone may agree that a piece of real estate will be collateral for a debt. If the debt isn't paid the creditor may have the property seized to satisfy the debt- although the PERSON hypothecating the property is not personally liable if the collateral doesn't pay off the debt. Thus the property is liable for the debt, not the person guaranteeing the debt. Indemnity- A legal agreement which provides that a person will assume liability out of a transaction. For example, someone may agree to turn a business over to another person for a reduced price if they pay the debts and other obligations of the business. In a broad sense, insurance policies are indemnity contracts. Injunction- A court order requiring someone to do something, as opposed to a money judgment. For example, in divorces there are frequently mutual restraining orders (a form of injunction) requiring both parties to leave another alone. Judgment- An order from a court which establishes that a person is liable to another for a sum of money, or is not liable. Can also include an "injunction"- a specific order to do or not to do something. Liquidated (Liquidated claim)- This term is used in statutes regarding who is entitled to be a witness to a Living Will. A "liquidated" claim is a right or a demand (even if disputed) to payment in a sum certain. An example of a liquidated claim is a promissory note for $10,000.00. One can examine the claim and determine its value by simple calculation. Ordinarily, one holding a liquidated claim against the declarant cannot be a witness to a living will. Misdemeanor- A minor crime (as opposed to a felony). Negligent- (Negligence)- A departure from what an ordinary reasonable member of the community would do in the same community. Negotiable- An instrument is negotiable when the rules of law allow it to be traded between parties and good faith holders (Holders in Due Course) receive the instrument free of most defenses. A promissory note, properly drafted, is a negotiable instrument. Non-economic damages- Damages for pain, suffering, loss of companionship, consortium (love of spouse). These are as opposed to economic losses, such as loss of wages, property, medical bills, and damage to property. Occasionally, laws limit the amount of "non-economic" damages which can be recovered for torts. Non-recourse assignment- When a promissory note is assigned, the person assigning the note is effectively endorsing the note and guaranteeing the note. However, a "non-recourse" assignment simply sells the note with no other agreements. Perfect ("Perfect a lien")- If Joe agrees to give you a lien on his lawn mower, then you have a deal. Given that you are a wise person, you obviously have a written agreement. This written agreement is valid between the two of you. What happens if Joe fails to pay his taxes and the I.R.S. files a lien? Unless you are PERFECTED the I.R.S. will get the lawn mower. They don't legally know about the lien unless you are perfected. Second example- you get a mortgage on a piece of property. Good for you. But someone else's lien goes first unless you are perfected- by recording the mortgage. Be sure to perfect any lien you get. Power of attorney (Durable power of attorney)- A power of attorney is a legal document which gives someone authority to act on your behalf. (Unless it involves appearing in a court, even though it is called a power of attorney it does NOT have to be made in favor of a licensed attorney.) Some living will statutes provide that you can designate someone to make decisions about your health treatment for you, should you be unable to do so. These statutes offer this option. To find out if a state in question's living will laws allows you to do so, please see the individual state summaries. A "durable" power of attorney is a special kind of power of attorney. It usually must appoint a family member or relative and often is limited in the kinds of powers that can be assigned. Unlike ordinary powers of attorney, durable powers can survive for long periods of time, and again, unlike standard powers of attorney, durable powers can continue after incompetency. Most standard powers of attorney are automatically revoked should you become incompetent. Principal- A person who designates another to act as their attorney in fact. The person giving a power of attorney. Punitive damages- Damages recoverable beyond all losses. Such damages are in the nature of a criminal fine. Many states limit punitive damages in certain classes of cases. Respondeat Superior- Latin for the "boss has to answer for what his employees do." Risk of loss- In a sales transaction the law of many states considers the buyer to be the owner of the land once the sales contract is signed, and the "owner" just to be "babysitting" (to put it in legal words-- "holds legal title as security for the payment of the purchase price") the land. Therefore, in some states, the "risk of loss" in case of a fire or other destruction of the property is passed to the buyer, even though they have not paid for the property. Therefore, real estate contracts and contracts for sales of businesses should specifically address the risk of loss. Subrogate- If one person performs a duty of another, they are then "equitable subrogated" to the rights of the person owed the duty. The most common form of subrogation is when an insurance company pays a claim caused by the negligence of another. Tort- A negligent or intentional wrong not arising out of a contract or statute. These include "intentional torts" such as battery or defamation, and torts for negligence. Tying arrangement- An agreement (against governmental regulations) requiring that a as a precondition of purchasing or obtaining services, that other services must be purchased and must be purchased through the seller. Not all tying arrangements are unlawful. However, in most instances banks and other lending institutions may not required that borrowers purchase credit life insurance or disability insurance as a precondition of a loan. Unliquidated (Unliquidated claim)- See liquidated claim. A claim is unliquidated when the amount of it cannot be mathematically calculated, or if it subject to a contingency. Usury- The civil or criminal wrong of charging interest that is beyond the legal limit.