I.   Introductory Provisions

Liabilities are the fourteenth of thirty-three (33) Administrative Elements of Trust being the Valuations entered into the Accounts of a Trust, or Estate, or Fund calculated at the time of an Inventory or by a special Valuation for each and every valid Record of an Obligation or Debit or within the performance and responsibility of the Trust, or Estate, or Fund.

A Liability is not the actual registered and recorded obligation, or debit, or performance itself, but the calculated Valuation entered into the Accounts at the time of performing an Inventory or special Valuation. Therefore, a Liability may be calculated as greater or lesser than the original recorded agreement and may also change over time.

All Records of Loans, Obligations, Promises, Debits and Claims within the responsibility of the Trust, or Estate, or Fund may be Valued and converted into Liabilities according to four classes being Primary, Capital, Operating and Exchangeable:

(i) Primary Liabilities are those Liabilities from which all other forms of Liability depend or are derived principally being any loss or sacrifice of Rights and Promises (Honor); and

(ii) Capital Liabilities, also known as Long-Term Liabilities are those Liabilities dependent upon Primary Liabilities which were given to help create and produce Capital Assets and Operating Assets. Examples of Capital Liabilities include (but are not limited to) mortgages, promissory notes, convertible shares, liens and other similar encumbrances which if defaulted may cause the loss of certain Rights; and

(iii) Operating Liabilities, also known as Current Liabilities are those Liabilities expected to be honored and settled within a normal period of “operating cycle” such as overdrafts, salaries, wages, purchases of goods and services, rents, insurance, interest payments, taxes and duties; and

(iv) Exchangeable Liabilities, also known as Liquid Liabilities are those Liabilities capable of being sold or converted quickly, with normally minimum risk of loss of estimated face value.