Failure of issue refers to the situation in which rights, shares, or other interests in a company or other entity are not able to be issued to the person who is entitled to them.
In the context of business legal terminology, failure of issue usually applies to situations in which the entity issuing the rights, shares, or other interests is unable to do so because of a legal restriction or other reasons.
Understanding Failure of Issue Qith a Modern Example
Let’s take the example of a company that is offering a series of stock options to its employees. If the company is unable to issue the stock options due to a lack of available stock, or if they are only able to issue some of the stock options due to a legal restriction, then this would be considered a failure of issue.
Implications of a Failure of Issue
It’s important to understand the implications of a failure of issue, as it may have financial, legal, and reputational ramifications. For example, if an employee is entitled to some stock options but the company is unable to issue them due to a failure of issue, the employee may be able to take the company to court for breach of contract or to seek reparations.
In addition, a failure of issue could result in a lack of confidence in the company from investors or other stakeholders, as it may be seen as an indication of the company’s ability to fulfill its contractual obligations.
Conclusion
Failure of issue is an important concept to understand in the context of business legal terminology, as it can have serious ramifications. If a company is unable to issue the rights, shares, or other interests that it is obligated to issue, due to a legal restriction or other reasons, then this would be considered a failure of issue.