Naked option

An opportunity to buy stock at a fixed price, offered by a seller who does not own the stock to back up the promise. If the buyer wants to exercise the option, the seller must purchase the stock at market price to make good on the offer.

National Labor Relations Board

n. an independent regulatory commission created in 1935 by the National Labor Relations Act (Wagner Act), with five members appointed by the President subject to confirmation by the Senate. The NLRB is intended to protect employees’ rights to unionize, prevent abuses by employers or unions, and oversee union and organizing elections.

Natural law

n. 1) standards of conduct derived from traditional moral principles (first mentioned by Roman jurists in the first century A.D.) and/or God’s law and will. The biblical ten commandments, such as “thou shall not kill,” are often included in those principles. Natural law assumes that all people believe in the same Judeo-Christian God and thus share an understanding of natural law premises. 2) the body of laws derived from nature and reason, embodied in the Declaration of Independence assertion that “all men are created equal, that they are endowed by their creator with certain inalienable Rights, that among these are Life, Liberty and the pursuit of happiness.” 3) the opposite of “positive law,” which is created by mankind through the state.

Natural person

n. a real human being, as distinguished from a corporation, which is often treated at law as a fictitious person.

Naturalization

The process by which a foreign person becomes a citizen.

Necessary

adj., adv. 1) essential. 2) less forcefully, it can mean convenient, useful or making good sense.

Necessary inference

n. 1) a conclusion militated by reason and logic applied to known facts. 2) unavoidable meaning.

Necessary party

n. a person or entity whose interests will be affected by the outcome of a lawsuit, whose absence as a party in the suit prevents a judgment on all issues, but who cannot be joined in the lawsuit because that would deny jurisdiction to the particular court (such as shifting jurisdiction from a state to federal court). In this rare technical situation, a necessary party who is not in the suit differs from an “indispensable party,” who must be joined if the lawsuit is to proceed, and from a “proper party,” who could be joined but is not essential.

Negative declaration

n. a finding by a city council or other local government that a proposed development or project would have no effect on the environment and therefore the developer need not prepare and file an “environmental impact report.”

Negative pregnant

A denial of wrongdoing in which a person actually admits more than she denies. For example, if a defendant who is accused of embezzling $2 million in 1996 denies that she embezzled $2 million during that year, the denial is pregnant with the possibility that she might have embezzled a different sum of money during a different time period.

Negligence

n. failure to exercise the care toward others which a reasonable or prudent person would do in the circumstances, or taking action which such a reasonable person would not. Negligence is accidental as distinguished from “intentional torts” (assault or trespass, for example) or from crimes, but a crime can also constitute negligence, such as reckless driving. Negligence can result in all types of accidents causing physical and/or property damage, but can also include business errors and miscalculations, such as a sloppy land survey. In making a claim for damages based on an allegation of another’s negligence, the injured party (plaintiff) must prove: a) that the party alleged to be negligent had a duty to the injured party-specifically to the one injured or to the general public, b) that the defendant’s action (or failure to act) was negligent-not what a reasonably prudent person would have done, c) that the damages were caused (“proximately caused”) by the negligence. An added factor in the formula for determining negligence is whether the damages were “reasonably foreseeable” at the time of the alleged carelessness. If the injury is caused by something owned or controlled by the supposedly negligent party, but how the accident actually occurred is not known (like a ton of bricks falls from a construction job), negligence can be found based on the doctrine of res ipsa loquitor (Latin for “the thing speaks for itself”). Furthermore, in six states (Alabama, North Carolina, South Carolina, Tennessee, Virginia, Maryland) and the District of Columbia, an injured party will be denied any judgment (payment) if found to have been guilty of even slight “contributory negligence” in the accident. This archaic and unfair rule has been replaced by “comparative negligence” in the other 44 states, in which the negligence of the claimant is balanced with the percentage of blame placed on the other party or parties (“joint tortfeasors”) causing the accident. In automobile accident cases in 16 states the head of the household is held liable for damages caused by any member of the family using the car under what is called the “family purpose” doctrine. Nine states (California, New York, Michigan, Florida, Idaho, Iowa, Minnesota, Nevada, Rhode Island) make the owner of the vehicle responsible for all damages caused by a driver given permission to use the car, whether or not the negligent driver has assets or insurance to pay a judgment. Eight states (Connecticut, Massachusetts, New Jersey, Oregon, Rhode Island, Tennessee, Virginia, West Virginia) allow the owner to rebut a presumption that the driver was authorized to use the car. Negligence is one of the greatest sources of litigation (along with contract and business disputes) in the United States. Not only are people responsible for the intentional harm they cause, but their failure to act as a reasonable person would be expected to act in similar circumstances (i.e. negligence) will also give rise to compensation.

Negligence per se

n. negligence due to the violation of a public duty, such as high speed driving.

Negligent

adj., adv. careless in not fulfilling responsibility.

Negociate

To communicate on a matter of disagreement between two parties, with a view to first listen to the other party’s perspective and to then attempt to arrive at a resolution by consensus.

Negotiable instrument

A written document that represents an unconditional promise to pay a specified amount of money upon the demand of its owner. Examples include checks and promissory notes. Negotiable instruments can be transferred from one person to another, as when you write “pay to the order of” on the back of a check and turn it over to someone else.

Negotiation

n. 1) the transfer of a check, promissory note, bill of exchange or other negotiable instrument to another for money, goods, services or other benefit. 2) give-and-take discussion or conference in an attempt to reach an agreement or settle a dispute.

Net

n., adj. the amount of money or value remaining after all costs, losses, taxes, depreciation of value and other expenses and deductions have been paid and/or subtracted. Thus the term is used in net profit, net income, net loss, net worth or net estate.

Net earnings

Earnings that remain after an employer subtracts mandatory deductions (such as income tax, union dues and Social Security contributions) from an employee’s gross income.

Net estate

The value of all property owned at death less liabilities or debts.

Net lease

A commercial real estate lease in which the tenant regularly pays not only for the space (as he does with a gross lease) but for a portion of the landlord’s operating costs as well. When all three of the usual costs–taxes, maintenance and insurance–are passed on, the arrangement is known as a “triple net lease.” Because these costs are variable and almost never decrease, a net lease favors the landlord. Accordingly, it may be possible for a tenant to bargain for a net lease with caps or ceilings, which limits the amount of rent the tenant must pay. For example, a net lease with caps may specify that an increase in taxes beyond a certain point (or any new taxes) will be paid by the landlord. The same kind of protection can be designed to cover increased insurance premiums and maintenance expenses.

New matter

n. newly claimed facts or legal issues raised (brought up) by a defendant (the party being sued) to defend himself/herself/itself beyond just denying the allegations in the complaint filed by the person bringing the lawsuit (plaintiff). Such new matters are called “affirmative defenses.”

Next friend

A person, usually a relative, who appears in court on behalf of a minor or incompetent plaintiff, but who is not a party to the lawsuit. For example, children are often represented in court by their parents as “next friends.”

Next of kin

The closest relatives, as defined by state law, of a deceased person. Most states recognize the spouse and the nearest blood relatives as next of kin.

Nihil

Latin for nothing.

Nil

n. from Latin nihil, nothing or zero.

Nisi prius

Latin for “unless first,” in some jurisdictions it means the original trial court which heard a case as distinguished from a court of appeals, as in court nisi prius. “Court of original jurisdiction” is often substituted for the term nisi prius.

No contest

n. in criminal law, a defendant’s plea in court that he/she will not contest the charge of a particular crime, also called nolo contendere. While technically not an admission of guilt for commission of the crime, the judge will treat a plea of “no contest” as such an admission and proceed to find the defendant guilty as charged. A “no contest” plea is often made in cases in which there is also a possible lawsuit for damages by a person injured by the criminal conduct (such as reckless driving, assault with a deadly weapon, aggravated assault), because it cannot be used in the civil lawsuit as an admission of fault. “No contest” is also used where there has been a “plea bargain” in which the defendant does not want to say he/she is guilty but accepts the sentence recommended by the prosecutor in exchange for not contesting the charge (which is often reduced to a lesser crime). It is standard practice for the judge to ask either the attorneys or the defendant, “Is there a factual basis for the plea?” before accepting it and finding the defendant guilty.

No-fault divorce

Any divorce in which the spouse who wants to split up does not have to accuse the other of wrongdoing, but can simply state that the couple no longer gets along. Until no-fault divorce arrived in the 1970s, the only way a person could get a divorce was to prove that the other spouse was at fault for the marriage not working. No-fault divorces are usually granted for reasons such as incompatibility, irreconcilable differences, or irretrievable or irremediable breakdown of the marriage. Also, some states allow incurable insanity as a basis for a no-fault divorce.

No-fault insurance

Car insurance laws that require the insurance companies of each person in an accident to pay for medical bills and lost wages of their insured, up to a certain amount, regardless of who was at fault. The effect of no-fault insurance laws is to eliminate lawsuits in small accidents. The advantage is the prompt payment of medical bills and expenses. The downsides are that the amounts paid by no-fault policies are often not enough to fully cover a person’s losses and that no-fault does not compensate for pain and suffering.

No-par stock

n. shares in a corporation which are issued without a price per share stated on the stock certificate.

Nolle prosequi

Latin for “we shall no longer prosecute.” At trial, this is an entry made on the record by a prosecutor in a criminal case stating that he will no longer pursue the matter. An entry of nolle prosequi may be made at any time after charges are brought and before a verdict is returned or a plea entered. Essentially, it is an admission on the part of the prosecution that some aspect of its case against the defendant has fallen apart. Most of the time, prosecutors need a judge’s permission to “nol-pros” a case.

Nolo

Latin for “I choose not to.”

Nolo contendere

Latin. A plea entered by the defendant in response to being charged with a crime. If a defendant pleads nolo contendere, she neither admits nor denies that she committed the crime, but agrees to a punishment (usually a fine or jail time) as if guilty. Usually, this type of plea is entered because it can’t be used as an admission of guilt if a civil case is held after the criminal trial.

Nominal damages

n. a small amount of money awarded to a plaintiff in a lawsuit to show he/she was right but suffered no substantial harm.

Nominal party

n. a defendant or a plaintiff included in a lawsuit because of a technical connection with the matter in dispute, and necessary for the court to decide all issues and make a proper judgment, but with no responsibility, no fault and no right to recovery. Example: suing an escrow holder or trustee who is holding a title to real property or deposited funds but has no interest in the property, funds or the lawsuit. Thus the court can order the nominal defendant to transfer title or pay out the funds when the rights of the real parties are decided.

Nominee

n. 1) a person or entity who is requested or named to act for another, such as an agent or trustee. 2) a potential successor to another’s rights under a contract. 3) the executor proposed by a person in a will is a nominee until officially appointed by the judge after the testator (will writer) has died, and the will is submitted for probate (administration of the estate). 4) a person chosen by convention, petition or primary election to be a candidate for public office.

Non compos mentis

Latin. adj. referring to someone who is insane or not mentally competent to conduct one’s affairs.

Non sequitur

Latin for “it does not follow.” The term usually means that a conclusion does not logically follow from the facts or law, stated: “That’s a non sequitur.”

Non-conforming use

n. the existing use (residential, commercial, agricultural, light industrial, etc.) of a parcel of real property which is zoned for a more limited or other use in the city or county’s general plan. Usually such use is permitted only if the property was being so used before the adoption of the zoning ordinance which it violates.

Non-contestability clause

n. an insurance policy provision which requires the insurance company to challenge any statement in the application for the insurance within a specific time. This prevents the company from denying coverage on the basis of fraud or error in the application when a claim is made by the policyholder.

Non-contiguous

adj. referring to two or more parcels of real property which are not connected.

Non-discretionary trust

n. a trust in which the trustee is directed to invest only in specifically named securities and to diversify the investments among certain types of securities. The trustee has no discretion or personal decision-making power in the matter.

Non-feasance

n. the failure of an agent (employee) to perform a task he/she has agreed to do for his/her principal (employer), as distinguished from “misfeasance” (performing poorly) or “malfeasance” (performing illegally or wrongly).

Non-suit

n. a ruling by the judge in a lawsuit either when the plaintiff (the party who filed the suit) does not proceed to trial at the appointed time or has presented all his/her/its evidence and, in the judge’s opinion, there is no evidence which could prove the plaintiff’s case. A non-suit terminates the trial at that point and results in a dismissal of the plaintiff’s case and judgment for the defendant.

Noncompetition agreement

An agreement, generally included in an employment contract or a contract for the sale of a business, where one party agrees not to compete with the other party for a specific period of time and within a particular area. Salespeople, for example, often sign noncompetition agreements that prevent them from using the contacts gained by one employer to benefit another employer. Or a salesperson may sign what is known as a “noncompete,” agreeing not to sell within a particular area, or even work in the same type of business. In some states, such as California, courts view noncompetition agreements with disfavor and will not enforce them unless the restrictions are very narrow. In other states, courts routinely uphold them.

Nondischargeable debts

Debts that cannot be erased by filing for bankruptcy. If you file for Chapter 7 bankruptcy, these debts will remain when your case is over. If you file for Chapter 13 bankruptcy, the nondischargeable debts will have to be paid in full during your plan or you will have a balance at the end of your case. Examples of nondischargeable debts include alimony and child support, most income tax debts, many student loans and debts for personal injury or death caused by drunk driving. Compare dischargeable debts.

Nondisclosure agreement

A legally binding contract in which a person or business promises to treat specific information as a trade secret and not disclose it to others without proper authorization. Nondisclosure agreements are often used when a business discloses a trade secret to another person or business for such purposes as development, marketing, evaluation or securing financial backing. Although nondisclosure agreements are usually in the form of written contracts, they may also be implied if the context of a business relationship suggests that the parties intended to make an agreement. For example, a business that conducts patent searches for inventors is expected to keep information about the invention secret, even if no written agreement is signed, because the nature of the business is to deal in confidential information.

Nonexempt property

The property you risk losing to your creditors when you file a Chapter 7 bankruptcy or when a creditor sues you and wins a judgment. Nonexempt property typically includes valuable clothing (furs) and electronic equipment, an expensive car that’s been paid off and most of the equity in your house.

Nonobviousness

A requirement for obtaining a patent. An invention is nonobvious if it would be viewed as an unexpected or surprising development by someone skilled in the technology of the particular field. For example, Babe Ruth III invents an electronic device that can signal whether a pitch is a ball or a strike. Babe’s patent application is rejected on the ground that similar technology has been developed for television commentators and that Babe’s invention extending these prior art developments to the game itself is obvious (in patent-speak, it “lacks nonobviousness”) and is therefore not patentable.

Nonprobate

The distribution of a deceased person’s property by any means other than probate. Many types of property pass free of probate, including property left to a surviving spouse and property left outside of a will through probate-avoidance methods such as pay-on-death designations, joint tenancy ownership, living trusts and life insurance. Property that avoids probate is sometimes described as the “nonprobate estate.” Nonprobate distribution may also occur if the deceased person leaves an invalid will. In that case, property will pass according to the particular state’s laws of intestate succession.

Nonprofit corporation

A legal structure authorized by state law allowing people to come together to either benefit members of an organization (a club, or mutual benefit society) or for some public purpose (such as a hospital, environmental organization or literary society). Nonprofit corporations, despite the name, can make a profit, but the business cannot be designed primarily for profit-making purposes, and the profits must be used for the benefit of the organization or purpose the corporation was created to help. When a nonprofit corporation dissolves, any remaining assets must be distributed to another nonprofit, not to board members. As with for-profit corporations, directors of nonprofit corporations are normally shielded from personal liability for the organization’s debts.

Nonrefundable ticket

An airline ticket for which you cannot get your money back if you decide not to travel. Each airline has its own policies and exceptions regarding nonrefundable tickets. For example, many airlines will allow you to apply the amount of an unused ticket towards a later flight, subject to a fee.

Nontransferable ticket

An airline ticket that can be used only by the passenger whose name appears on the ticket. All airlines require passengers to show ID when they check in, and an airline can confiscate a ticket if the names on the ID and on the ticket don’t match.

Not guilty

n. 1) plea of a person who claims not to have committed the crime of which he/she is accused, made in court when arraigned (first brought before a judge) or at a later time set by the court. The choices of what one can plea are: guilty, not guilty, no contest, not guilty by reason of insanity, or incompetent to stand trial. 2) verdict after trial by a judge sitting without a jury or by a jury (unanimous decision in all but two states, which allow a verdict by only 10 of 12 jurors), stating that the prosecution has not proved the defendant guilty of a crime or that it believes the accused person was insane at the time the crime was committed. The accused cannot be tried again for the crime charged.

Not guilty by reason of insanity

n. plea in court of a person charged with a crime who admits the criminal act, but whose attorney claims he/she was so mentally disturbed at the time of the crime that he/she lacked the capacity to have intended to commit a crime. Such a plea requires that the court set a trial on the issue of insanity alone either by a judge sitting without a jury or by a jury. A finding of insanity will result in a verdict of “not guilty,” but, if the condition still exists, it may result in incarceration in a mental facility for the criminally insane or confinement in a mental hospital. If the insanity no longer exists (temporary insanity), the judge has the option to require some psychological therapy, but the treatment varies from state to state. This is not the same as insane at time of trial and thus incompetent to stand trial, which will postpone trial (in all likelihood forever) pending recovery while the defendant is confined to a mental facility.

Notarize

Certification by a notary public to establish the authenticity of a signature on a legal document. Many legal documents, such as deeds and powers of attorney, are commonly notarized.

Notary public

A licensed public officer who administers oaths, certifies documents and performs other specified functions. A notary public’s signature and seal is required to authenticate the signatures on many legal documents.

Note

n. a promissory note, a written statement of debt by one or more people to one or more people, with a statement of a specific amount owed or due, date it is due, interest (if any) on the amount, and other terms such as installments, penalty for late payment, full amount due if delinquent, how secured (as by real property), and attorneys’ fees and costs if required to collect on the note.

Notice

n. 1) information, usually in writing in all legal proceedings, of all documents filed, decisions, requests, motions, petitions, and upcoming dates. Notice is a vital principle of fairness and due process in legal procedure and must be given to both parties, to all those affected by a lawsuit or legal proceeding, to the opposing attorney and to the court. In short, neither a party nor the court can operate in secret, make private overtures or conceal actions. Notice of a lawsuit or petition for a court order begins with personal service on the defendants (delivery of notice to the person) of the complaint or petition, together with a summons or order to appear (or file an answer) in court. Thereafter, if a party is represented by an attorney, notice can usually be given to the attorney by mail. If there is a so-called ex parte hearing (an emergency session with a judge with only the requesting party or his/her attorney present) the party wanting the hearing must make a diligent attempt to give notice to the other party. A court may allow “constructive” notice by publication in an approved legal newspaper of a summons in a lawsuit. Examples: in a divorce action, publication gives constructive notice to a spouse known to have left the state or hiding to avoid service; in a quiet title action, notice by publication is given to alert unknown descendants of a dead person who may have had an interest in the real property which is the subject of a lawsuit. Recordation of deeds, mortgages, deeds of trust, easements, leases and other documents affecting real property title give “constructive” notice to the general public, and thus “constructive” notice to anyone interested in the property, without delivering notice to individuals. 2) a writing informing a party to a contract, promissory note, lease, rental agreement or other legal relationship of a delinquency in payment, default, intent to foreclose, notice to pay rent or quit (leave) or other notice required by the agreement, mortgage, deed of trust or statute. 3) information. 4) being informed of a fact, or should have known based on the circumstances, as “he had notice that the roof was not water-tight.”

Notice of default

n. a notice to a borrower with property as security under a mortgage or deed of trust that he/she is delinquent in payments. If the delinquency (money owed and late), plus costs of preparing the legal papers for the default, are not paid within a certain time, foreclosure proceedings may be commenced. Other people with funds secured by the same property are usually entitled to receive copies of the notice of default.

Notice to quit

n. the notice given by a landlord (owner) to a tenant to leave the premises (quit) either by a certain date (usually 30 days) or to pay overdue rent or correct some other default (having pets, having caused damage, too many roommates, using the property for illegal purposes, etc.) within a short time (usually three days). A notice to quit must contain certain information, such as: names of the persons to leave, whether their tenancy is by written or oral agreement, an amount of any financial delinquency and the period it covers, and to whom they should surrender the premises. If the tenant is month-to-month, a notice to quit without reference to default usually requires no reason. Although state laws vary, generally the notice must be served personally on the tenant or posted in a prominent place like the front door with a copy sent by certified mail. Such notice and failure of the tenant to quit (leave) is a requirement to bring a lawsuit for unlawful detainer (often referred to as “eviction”).

Notorious possession

n. occupation of real property or holding personal property in a way which anyone can observe is as if the person is the owner.

Novation

The substitution of a new contract for an old one. A novation may change one of the parties to the contract or the duties that must be performed by the original parties.

Novelty

A requirement for obtaining a patent. To be novel, an invention must be physically different in some way from all previous inventions.

Noxious

adj. harmful to health, often referring to nuisances.

Nugatory

adj. of no force or effect; invalid. Example: a statute which is unconstitutional is a nugatory law.

Nuisance

Something that interferes with the use of property by being irritating, offensive, obstructive or dangerous. Nuisances include a wide range of conditions, everything from a chemical plant’s noxious odors to a neighbor’s dog barking. The former would be a “public nuisance,” one affecting many people, while the other would be a “private nuisance,” limited to making your life difficult, unless the dog was bothering others. Lawsuits may be brought to abate (remove or reduce) a nuisance.

Nuisance fees

Money charged by some credit card companies to increase their profits when you fail to use the card the way the creditor wants. Examples include late payment fees, inactivity fees and fees for not carrying a balance from month to month. It’s best to shop around and get rid of cards that have these fees attached.

Nulla bona

Latin for “no goods.” This is what the sheriff writes when she can find no property to seize in order to pay off a court judgment.

Nullity

n. something which may be treated as nothing, as if it did not exist or never happened. This can occur by court ruling or enactment of a statute. The most common example is a nullity of a marriage by a court judgment.

Nunc pro tunc

Latin for “now for then,” this refers to changing back to an earlier date of an order, judgment or filing of a document. Such a retroactive re-dating requires a court order which can be obtained by a showing that the earlier date would have been legal, and there was error, accidental omission or neglect which has caused a problem or inconvenience which can be cured. Often the judge will grant the nunc pro tunc order ex parte (with only the applicant appearing and without notice).