Future Business Leaders of America (FBLA) Business Law Practice Exam

Who is defined as the party that buys goods on credit or borrows money?

1. Debtor

2. Creditor

3. Owner

4. Vendor

The correct answer is: Debtor

The party that buys goods on credit or borrows money is referred to as the debtor. In this context, the debtor is the individual or entity that incurs a debt by purchasing goods or services with the promise to pay for them later, which typically occurs at a future date. This relationship is foundational in financial transactions, where one party provides goods, credit, or money, and the other party agrees to repay that obligation. The term creditor, which refers to the party that extends credit or lends money to the debtor, accurately describes the counterpart to the debtor but does not fit the definition provided in the question. The terms owner and vendor are also unrelated within this context; the owner refers to someone who holds title or property rights of goods, while the vendor is a seller of goods or services. Thus, the debtor is specifically designated in legal and financial contexts as the one who bears the obligation of repayment or payment for the goods or services received.