Bankruptcy

The legal procedure by which a person or business that is unable to meet financial obligations is relieved of debt by having the court divide the assets among the creditors is called bankruptcy. Some firms emerge from bankruptcy as leaner, healthier companies.

@ Key Terms

agency	intentional tort	private law	strict liability
bankruptcy	lease	product-liability law	title
breach of contract	negligence	property	tort
deed	personal property	public law	warranty
intellectual property	power of attorney	real property

Review Questions

1.What is the difference between private law and public law?

2.What is the difference between negligence and intentional torts?

3.Define the concept of strict product liability.

4.Why is agency important in business?

5.What is bankruptcy?

CDTrue-False Questions

	TRUE FALSE	Title is transferred as soon as the buyer accepts the goods.
	TRUE FALSE	As a principal, your responsibility for the actions of your agent is limited if the agent does something illegal.
	TRUE FALSE	A contract is an exchange of promises enforceable by law.

4 Key Terms Exercise

Match the words with their definitions

1.	agency	a)	written authorisation for one party to act as an agent on behalf of another party
2.	breach of contract	b)	wilful injury for which an injured person is entitled to compensation
3.	contract	c)	rights held regarding any tangible or intangible object
4.	intentional tort	d)	non-criminal act that results in injury to person or property
5.	lease	e)	legal ownership of property
6.	negligence	f)	legal agreement between the owner of equipment or an asset and the individual or business for using the equipment or asset
7.	power of attorney	g)	law that holds a manufacturer liable for injuries caused by a defective product
8.	private law	h)	law that concerns itself with the relationship between the government and individual citizens
9.	product-liability law	i)	law that concerns itself with relationship between individuals, between an individual and a business or between two businesses
10.	property	j)	guarantee or promise of manufacturer
11.	public law	k)	failure to observe a reasonable standard of care in a specific situation
12.	strict liability	l)	failure to live up to the terms of a contract, with no legal excuse
13.	title	m)	exchange of promises enforceable by law
14.	tort	n)	concept of liability even in cases where the defendant has used reasonable care
15.	warranty	o)	business relationship that exists when one party authorises another party to act on his/her behalf

Multiple Choice Question

If your roommate pours a soft drink on your stereo because "you were playing it too loud" and then tells your best friend the spill was done on purpose, a _____ has been committed.

a.public law violation b.intentional tort c.tort d.white-collar crime

JIt's Interesting to Know

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