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Simple English definitions for legal terms
freeze
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A quick definition of freeze:
Freeze can mean different things depending on the context. It can refer to a time when the government stops certain activities like lending money or increasing prices. It can also mean a way to organize a company's ownership so that the owner can pass it on to their family without paying taxes. When we say we freeze something, it means we make it stay still and not move. This can happen when the police tell someone to stop moving or when the government stops someone from using their money or assets.
A more thorough explanation:
A freeze is a period when the government restricts or immobilizes certain commercial activity. This can happen in different ways:
- A credit freeze is when the government restricts bank-lending.
- A wage-and-price freeze is when the government forbids the increase of wages and prices.
- A recapitalization freeze is when the value of a closed corporation's existing capital is concentrated primarily in preferred stock rather than in common stock.
Freeze can also be a verb that means:
- To cause something to become fixed and unable to increase, such as interest rates or prices.
- To make something immobile by government mandate or banking action, such as assets.
- To cease physical movement, especially when ordered by a law enforcement officer.
Example 1: During the financial crisis of 2008, the government implemented a credit freeze to prevent banks from lending too much money and causing further economic damage.
Example 2: In the 1970s, the government implemented a wage-and-price freeze to combat inflation. This meant that companies could not raise prices or wages for a certain period of time.
Example 3: A business owner may use a recapitalization freeze to transfer common stock to heirs without taxation while continuing to enjoy preferred-stock income during their lifetime.
Example 4: When a police officer shouts at a suspect to freeze, they are ordering them to stop moving and stay still.
These examples illustrate how a freeze can be used in different contexts, such as in economics or law enforcement. In each case, a freeze is used to restrict or immobilize certain activity for a specific period of time.