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6 Legal Words That Can Boost Or Bust Your BudgetForbes, Deborah Jacobs
You might not be a lawyer, or even play one on TV, but there are times when you need to know the law.
A surprising number of my friends who are not lawyers (and even some who are) are intrigued by legal words and phrases. As the editor of a legal dictionary, this makes me a popular guy at cocktail parties. There are so many legal expressions that consumers either don’t know or simply misunderstand. These include terms that could affect their bottom line or are just plain fun (really).
Don’t believe me? Consider this: During and after the Great Recession, many people have worried about losing their homes because of credit card debt, medical expenses, or business loans. In some states they are completely or partly protected by homestead laws.
1. Homestead The place of one’s primary home. State law defines the term, so the exact meaning varies. In some states the homestead is the dwelling, its land, and outbuildings, but if your primary residence is a condominium, a boat or a mobile home, that might also count. Some jurisdictions limit how much is protected; if you live in a city, it might be less than in a rural or agricultural setting.
Typically, the homestead can’t be taken to satisfy general debts of its owner, but creditors may still be able to put liens on it. For example, one owner of a homestead can put a lien on a co-owner’s share, so your former spouse may still have a stake in the home even after he or she moves out. The homestead may also be lost to taxes, and to satisfy certain debts, like a mortgage, if you pledged the house as collateral.
And speaking of debts, in these matters and many others, we are at the mercy of the fine print. What is that stuff, and does it really do what it says it does? We’re talking boilerplate here.
2. Boilerplate This is the prefab language in a contract or other document, such as a lease or credit-card agreement. Boilerplate is useful because it deals with many routine matters and avoids the need to reinvent the wheel for routine transactions. But when it is unfair, or when it is so vague or unreadable that a consumer would not know what it means, the courts are likely to find the agreement invalid.
Landlords, credit-card companies, and other business that use pre-printed forms may try to make the tenant or consumer comply with boilerplate, but some boilerplate is so excessive that it amounts to fraud. So if your car lease specifies that you have to pay the company’s attorney fees if you sue them, you can probably ignore that. Go ahead and sue if you think you have a good case. Then ask the court to throw out that clause in the contract.
Can you really believe what you read on the Internet? What about late-night infomercials or the sales pitch at the used car lot? Some of this seems too good to be true—and it is. Lawyers have a playful name for the hype. It’s called “puffery.”
3. Puffery Inflated claims about a product or service. These are statements made by sellers that no reasonable person would rely upon in assessing the quality or utility of a product or service. “Puffing” is the spewing of puffery.
In fact, these statements are so ridiculous that they don’t usually count as a warranty if the product fails to deliver on the puffed-up claims. That’s different from straight forward information about a product’s fitness for a particular purpose that you couldn’t independently verify.
Where does puffery end and information begin? Think of puffery as something that couldn’t possibly be true—like the claim that a certain mattress will ensure you a great night’s sleep. Contrast that with the mattress maker who promises a mattress is softer than a competitor’s. If you buy it, only to discover that the competitor’s is soft as down and yours is hard as a rock, you can sue for breach of the express warranty.
Let’s say you have a swimming pool, trampoline, or a bouncy castle on your property. In the world of personal injury law, this could turn into what’s called an “attractive nuisance.”
4. Attractive nuisance A dangerous object on a property that will draw potential victims to it. An attractive nuisance is so alluring that a child is likely to trespass onto the property to use it, and so hazardous that the young person risks injury or death by using it. The classic example was a railroad turntable. Today the category has grown to include swimming pools, heavy machinery and carnival rides. Legally, the property owner has an obligation to keep children out — for example, by putting a fence around the pool.
Have you looked at your homeowner’s insurance policy lately? You will almost certainly find references there to Acts of God. Old-fashioned as it may sound, it’s an important topic after a storm or other natural disaster.
5. Act of God A cause of damage or interference without human fault. Act of God describes any storm, wind, earthquake, meteorite strike, falling limb, or other occurrence not caused by a person, which results in damage, injury, delay, or some other harm. Contracts typically say that neither party is responsible to the other for damages suffered because of an Act of God.
Shipwrecks, plane crashes, and floods give rise to all sorts of damages, ranging from property damage to lost income from slowed manufacture and cargo transport, to upset vacationers who miss their reservations from grounded airlines. In each case, the interests that might otherwise be compensated if the harm were caused by a person may not be covered if the cause was an Act of God.
With property insurance, there may be room for hairsplitting. For instance, the standard policy may reimburse you for damage from rain and wind, but exclude coverage for floods and earthquakes. (See “Does Your Insurance Cover Earthquake Damage?”)
Some legal concepts are so old that they have Latin words to go with them. But occasionally a new word creeps into the lexicon and catches on immediately because it captures an idea so well. “Three-pony rule,” a phrase coined by a Kansas judge in 1996, nicely illustrates a basic family law principle and has been taken up by judges in other states.
6. Three-pony rule This is a term used in the context of divorce to describe child support obligations when one parent is wealthy. (It has no application for children from households of middle-income families or parents of more modest means.) In these cases, the child must be assured enough support that he or she has both the necessities of life and the benefits of affluence. But the court should not require support that amounts to over-indulgence. In other words, three ponies are enough for one kid.
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