Simple English definitions for legal terms
Read a random definition: mortgage commitment
Definition: A circumstance that indicates a party to a transaction intended to hinder or defraud the other party. Examples include a transfer made in anticipation of litigation, a transaction outside the usual course of business, or a false statement.
Explanation: A badge of fraud is a red flag that suggests someone is trying to cheat or deceive another person. For example, if someone sells their car to a friend for $1 right before they get sued, that could be a badge of fraud because it looks like they're trying to hide their assets from the person who is suing them. Similarly, if a company suddenly sells all of its inventory to a shell company for a fraction of its value, that could be a badge of fraud because it looks like they're trying to move assets out of reach of their creditors.
Examples:
These examples illustrate how a badge of fraud can be used to hide assets or deceive creditors. In each case, the person or company is trying to avoid paying their debts or facing the consequences of their actions.