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Legal Terminologynaked 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. natural person A living, breathing human being, as opposed to a legal entity such as a corporation. Different rules and protections apply to natural persons and corporations, such as the Fifth Amendment right against self-incrimination, which applies only to natural persons. naturalization The process by which a foreign person becomes a U.S. citizen. Almost everyone who goes through naturalization must first have held a green card for several years. A naturalized U.S. citizen has virtually the same rights as a native-born American citizen. negative amortization See capitalized interest. 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. 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. 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. net taxable estate See taxable estate. 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. 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. Compare 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. nol. pros. See nolle prosequi. 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. (See Federal Rule of Criminal Procedure 48a.) Abbreviated “nol. pros.” or “nol-pros.” nolo Latin for I choose not to. See nolo contendre. nolo contendere 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 See damages. noncompete See noncompetition agreement. 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. Compare exempt property. nonimmigrant People who come to the United States temporarily for some particular purpose but do not remain permanently. There are many types of nonimmigrants. Students, temporary workers and visitors are some of the most common. nonimmigrant visa A U.S. visa that allows an individual to come to the United States temporarily and for a limited purpose. Each nonimmigrant visa comes with a different set of privileges, such as the right to work or study. In addition to a descriptive name, a letter of the alphabet and a number identifies each type of nonimmigrant visa. Student visas, for example, are F-1 or M-1 and investors are E-2. Nonimmigrant visas also vary according to how long they permit you to stay in the United States. For example, on an investor visa, you can remain for many years, but on a visitor's visa, you can stay for only six months at a time. 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. Some nonprofit corporations qualify for a federal tax exemption under § 501(c)(3) of the Internal Revenue Code, with the result that contributions to the nonprofit are tax deductible by their donors. 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. 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. 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. 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. See quiet enjoyment, attractive 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.
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