An attorney-in-fact does not have to be an attorney; it can be any person named in a power-of-attorney document to act on behalf of someone else (the “principal”). The attorney-in-fact doesn’t have unlimited powers, however. All of the powers and responsibilities are set forth in the power-of-attorney document. They often include the authority to sign contracts on behalf of the principal.
See: agent
Americans owe a staggering $900 billion to credit card companies. That’s why most card-carrying members of the credit-card class aren’t surprised when the credit card company adds some sticker shock each month (for failing to pay their credit card off in full). These additional monthly interest payments are calculated using an annual percentage rate (APR) established by the federal government The APR is divided by twelve to arrive at a periodic interest rate, then multiplied against your monthly balance to come up with your monthly interest payment. References to APRs are often found in loan agreements and mortgages, or may be used in a contract as the standard for determining interest on late payments.
In 1995, a U.S. company, Alantec, was sold for $770 million. The founders, who thought they owned 90% of the stock, received a measly $600,000. Why? Venture capitalists who owned a small share of the company had been issuing the company’s common stock to many investors, which diluted the founder’s ownership to .007 percent. To prevent this type of dilution, stock sale and stock transfer contracts typically contain a provision that prevents the value of the stock from decreasing as a result of additional shares being issued (a process known as “dilution”).
During the 1930s, homeowners purchased homes with much shorter mortgages (three to five years) than today’s 20-30 year loans. Down payments for these short mortgages ranged from 50% to 80% of the purchase price and ended with a large balloon payment. That may explain why more than half of the population rented and most of the rest were in danger of losing their homes during the Great Depression. In 1934, the Federal Housing Authority stepped in with a new system of government-backed mortgages, which required a much lower down payment, and spread repayment of the loan amount (the principle) and the cost of the loan (the interest) over a longer period, using a system called amortization. Using an amortized payment plan, the borrower—for example, in a mortgage or car loan—gradually pays less interest (and more principal) as the payment plan progresses.
EXAMPLE: Jake borrows $100,000 to purchase a condo at 8% interest and plans to pay it back over ten years. Although each of his120 monthly payments will be for the same amount ($1213), less than half of his first payment will go toward paying off the principal; the rest will pay the interest on the loan. As the principal is paid off, the interest owed decreases and the amount of each payment that goes toward the principal increases over the life of the loan, until only $8 of his final payment goes toward interest.
An accretion clause spells out how the extra money, property, or people will be treated (for example, who will own the land created by sedimentation).
EXAMPLE:A company leased ATM machines. When one of its customers missed a payment, the company tried to enforce an acceleration clause that made all future payments immediately due. An Ohio Court of Appeal ruled that the acceleration clause was unenforceable because it did not impose any obligation on the leasing company to minimize (or “mitigate”) its damages. For example, if the leasing company repossessed the ATM machine and then immediately leased it to someone else, the amount it earned from the new rental should have been offset from the amount owed by the first customer. Otherwise, the ATM company is getting paid twice for use of the same machine.A court will also decline to enforce an acceleration clause if the parties have an honest dispute about the amount owed.
