Final answer:
When a lender waives their legal right to pursue a debt, they have most likely entered into a debt forgiveness agreement. It relieves the borrower from the obligation to repay the debt. In some ancient societies, debt forgiveness was granted in specific circumstances.
Step-by-step explanation:
When a lender waives their legal right to pursue a debt, they have most likely entered into a debt forgiveness agreement. This agreement relieves the borrower from the obligation to repay the debt, effectively cancelling it. Debt forgiveness can occur in various situations, such as when a lender decides to write off a debt due to financial hardship or as part of a negotiated settlement.
For example, in ancient Babylon, Hammurabi's Code of Laws included provisions for debt forgiveness during times of natural disaster or crop failure. If a debtor couldn't pay their debt due to circumstances beyond their control, they could wash their debt-tablet in water and be relieved from the obligation for that year.