Book Opener

Under the law of some states, people who are in prison suffer “civildeath.” They lose the right to vote, to contract, and to bring and defendagainst civil lawsuits. In these states, the statute of limitations on contractsoften stops running while a person is in prison. Also, in someinstances, the debt may be renewed. If a debtor makes a partial paymentor admits that the debt exists after the time period has passed, the debtis renewed for another time period set by the state statute. In New Yorkand some other states, such a new promise must be in writing. Thereare many special statutes of limitations in every state. To protect yourselffully in important business relationships, you should refer to themost recent statutes in your state.BankruptcySometimes people and businesses get hopelessly in debt and cannotpay their debts as they become due. Under Old English common law, suchpeople were placed in debtors’ prisons and had no hope of recovering.The drafters of the U.S. Constitution opposed such treatment of debtors.They gave Congress the authority to pass bankruptcy laws . These lawsset procedures for discharging a debtor’s obligations. These obligations stillexist, but the debtor can no longer be imprisoned for failure to pay.Certain debts cannot be discharged under bankruptcy laws. Educationloans, for example, usually cannot be discharged during the firstfive years of the repayment period. In addition, debts for taxes, alimony,support, and maintenance are not affected by a general discharge ofdebts in bankruptcy.ComputerTechnologyElectronic money willbecome legal tender inSingapore by the year2008. Every merchantin the country will berequired to accepte-money from customers,regardless of the price ofthe item being purchased.E-money will be loaded inelectronic purses storedon smart chips locatedin devices such as mobilephones or personal digitalassistants.Research ActivityPredict when electronicmoney will be used in theUnited States. Explainwhether you believee-money will ever totallyreplace our paper currency.Reviewing What You Learned1. When will the law permit a discharge byimpossibility?2. When will the law permit a discharge byoperation of law?3. What is the statute of limitations?4. What debts cannot be discharged inbankruptcy?Critical Thinking ActivityBankruptcy What is the legal philosophybehind the idea that certain contracts cannot bedischarged in bankruptcy?Legal Skills in ActionDebts after Bankruptcy Your friend Charlottesays her parents are about to go to bankruptcycourt. She believes that all of the family’sdebts will vanish as a result of the bankruptcyproceedings. Write a letter to your friendexplaining that some of her family’s debts willremain even after declaring bankruptcy. Namesome of the kinds of debt that cannot bedischarged.Chapter 11: How Contracts Come to an End 235