What Effect Does Bankruptcy Have on a Contract

question 12

Multiple Choice

What effect does bankruptcy have on a contract?

• A)The bankrupt's contractual liabilities are transferred to a trustee and all obligations both past and future are discharged.
• B)The bankrupt's contractual liabilities are transferred to a trustee and the bankrupt is no longer required to perform their contractual obligations.
• C)The bankrupt's rights,but not their obligations,are transferred to a trustee.
• D)The bankrupt is in breach and the contract comes to an end.

---

Definitions:

Perfectly Elastic Demand

Perfectly elastic demand is a market scenario where the demand for a product can drastically change (increase or decrease) at the slightest change in price, essentially to infinity.

Patents

Legal documents granted by the government giving an inventor exclusive rights to manufacture, use, or sell an invention for a certain number of years.

Innovation Incentives

Mechanisms or policies designed to encourage the development and implementation of new ideas, products, or methodologies.

Monopoly Power

The degree of control a company has over a market, enabling it to set prices or exclude competition.