Final answer:
Bankruptcy is a condition where the termination of a contract cannot be immediately sought by either party. This is because, in bankruptcy, assets and liabilities are managed through legal proceedings, which can disrupt the fulfillment of contractual obligations. The correct answer is C. The company goes bankrupt.
Step-by-step explanation:
Under which circumstances may termination not be sought by either party? This question refers to situations involving contractual obligations that cannot be easily terminated. In general, termination can typically be sought by either party under various conditions such as non-payment, breach of contract, failure to provide services, or unacceptable behavior. However, there is an exception to this rule:
Bankruptcy is a specific case where the normal rules of contractual obligations can be disrupted. When a company goes bankrupt, it may not be possible for either party to seek the immediate termination of a contract or the fulfillment of its terms as they were originally intended.
The reason for this is that the assets and liabilities of the bankrupt company become subject to legal proceedings, which prioritize the claims of creditors according to statutory and case law. Therefore, even if a bond issuer goes bankrupt, the payments promised to bondholders may be disrupted, delaying or reducing what can be recovered.
Similarly, the economic growth can be hindered by bankruptcy since it is more challenging to transact business or enter into contracts without the enforcement of a legal system that backs contractual and property rights.