This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Bankruptcy is of importance in the law of contracts because of the fact that, by compliance with the provisions of the bankruptcy laws, a discharge may be obtained which will operate as a defense to many of the prior obligations of the bankrupt.2 Bankruptcy will accordingly be considered from the standpoint of the discharge and the effect thereof. Bankruptcy is a proceeding or a system of law under which such proceeding is brought, or the status of a person who has been adjudged a bankrupt under such system of law and such proceeding. A bankrupt law is, as a rule, easy to recognize and hard to define. It is a statutory rule of law, since there was no common-law bankruptcy; and it provides for adjudging an insolvent debtor bankrupt, for taking charge of his property and distributing it among his creditors, and for discharging a debtor who has complied with the provisions of such bankrupt law from certain debts, so that no personal liability can be enforced against him thereafter by reason of such debts, unless he has assented thereto in some way. All of these elements are present, as a matter of fact, in most bankruptcy legislation. They need not all be present in each proceeding in bankruptcy. A proceeding is none the less a proceeding in bankruptcy, although the bankrupt may have no property, or although a discharge may be refused to the bankrupt because of his failure to comply with requirements of the bankrupt law.