| Dictionary: De·fal·ca·tion |
[LL. defalcatio: cf. F. défalcation.]
1. A lopping off; a diminution; abatement; deficit. Specifically: Reduction of a claim by deducting a counterclaim; set- off. Abbott.
2. That which is lopped off, diminished, or abated.
3. An abstraction of money, etc., by an officer or agent having it in trust; an embezzlement.
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| Business Dictionary: Defalcation |
Failure of one entrusted with money to pay over the money when it is due to another. The term is similar to misappropriation and Embezzlement, but wider in scope because it does not imply criminal Fraud.
| Law Encyclopedia: Defalcation |
The misappropriation or embezzlement of money.
Defalcation implies that funds have in some way been mishandled, particularly where an officer or agent has breached his or her fiduciary duty. It is commonly applied to public officers who fail to account for money received by them in their official capacity, or to officers of corporations who misappropriate company funds for their own private use.
Colloquially, the term is used to mean any type of bad faith, deceit, misconduct, or dishonesty.
| Word Tutor: defalcation |
The employee's defalcation resulted in her dismissal from the job.
| Wikipedia: Defalcation |
A defalcation is an amount of funds misappropriated by a person trusted with its charge; also, the act of misappropriation, or an instance thereof. The term is more specifically used by the United States Bankruptcy Code to describe a category of bad acts that taint a particular debt such that it cannot be discharged in bankruptcy.[1]
Defalcation occurs when a debtor commits a bad act while acting in a fiduciary capacity.[2] The classic example of defalcation is when a trustee recklessly invests trust funds and loses the money. If the beneficiary successfully wins a judgment against the trustee, and the trustee files for bankruptcy, the debt (the judgment) cannot be discharged in bankruptcy because the debt was the result of a defalcation.
Defalcation only applies when a debtor is acting in a fiduciary capacity. To constitute a defalcation, the conduct involves a degree of culpability that is greater than negligence, but the act does not need to rise to the level of a "fraud" under common law. Defalcation requires a showing of conscious behavior or extreme recklessness.[3]
The term is used in legal proceedings other than bankruptcy to refer more generally to embezzlement; it is often used in the context of the title insurance business. A title agent who misuses funds intended to be used to close insured transactions is said to be involved in a defalcation. Many title insurers have their own "defalcation units."
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 | embezzlement |
| fiduciary |
| corporations |
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Copyrights:
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 | Dictionary. Webster 1913 Dictionary edited by Patrick J. Cassidy Read more |
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| Business Dictionary. Dictionary of Business Terms. Copyright © 2000 by Barron's Educational Series, Inc. All rights reserved. Read more |
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| Law Encyclopedia. West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved. Read more |
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| Word Tutor. Copyright © 2004-present by eSpindle Learning, a 501(c) nonprofit organization. All rights reserved. eSpindle provides personalized spelling and vocabulary tutoring online; free trial. Read more |
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| Wikipedia. This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article "Defalcation". Read more |
