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From: warren@ihnss.UUCP (Warren Montgomery)
Newsgroups: net.legal
Subject: Re: "Unintentional" creditors in business bankrupcies
Message-ID: <1853@ihnss.UUCP>
Date: Wed, 21-Dec-83 11:46:07 EST
Article-I.D.: ihnss.1853
Posted: Wed Dec 21 11:46:07 1983
Date-Received: Sat, 24-Dec-83 11:12:22 EST
References: <568@dciem.UUCP> <2978@utcsrgv.UUCP>
Organization: AT&T Bell Labs, Naperville, Il
Lines: 45

My original posting on this subject has generated some interesting
discussion.  I would like to contribute a couple of points.

1)	In some business transactions, one side or the other extends
	credit, in the form of advance payment or reciept of goods
	or services before payment.  This is typical commerce, and
	companies make allowances for bad accounts in their
	procedures.  They get tax benefits for bad debts and in some
	cases insure against them.  The credit extension is a
	conscious decision, and a factor in deciding to go ahead
	with a transaction.  (Some companies will not deal with some
	suppliers because they are poor credit risks.
	
	In many consumer transactions, no credit is consciously
	extended.  There is a simple exchange of cash for goods. 
	The credit worthiness of the customer or the business
	doesn't figure in the transaction.  My complaint is that
	somehow, just because the exchange took place by mail, my
	payment which was supposed to be immediately exchanged for
	merchandise was considered as extension of credit to the
	merchant.  In my mind, any other use of that money (such as
	deposit in general account, use for payment of others) is
	really theft by the merchant.  The law should allow for
	exchange of cash for merchandise with niether side becoming
	creditors.  This ought to apply to the airplane purchaser
	mentioned in one of the followups as well,  The purchaser in
	good faith exchanged cash for the airplane and presumably
	had no interest in extending credit to the merchant.  If the
	sale was legal, I don't see why the law should make the
	purchaser responsible for the merchant's unpaid debts.
	
	Maybe the real problem is that it is too easy to declare
	bankrupcy and nobody seems to be responsible for the unpaid
	debt.  Given that, however, I would think that the intention
	would be to limit the number of people at risk from
	bankrupcy.
	
Again, thanks for the interesting news discussion.

-- 

	Warren Montgomery
	ihnss!warren
	IH x2494