What is champerty?

Champerty refers to an arrangement where a third party agrees to finance a lawsuit in exchange for a portion of the proceeds if the lawsuit is successful. This concept often arises in the context of litigation funding, where individuals or entities may seek financial support to pursue legal claims without bearing the full cost of the litigation themselves. The essence of champerty is the sharing of profits derived from the legal action, which involves a degree of commercial interest in the outcome of the case.

Understanding this term is crucial, particularly in legal and business environments, as champerty can have implications on the enforceability of such agreements and the ethical considerations surrounding litigation funding. The other options relate to different legal concepts: avoiding monopolies pertains more to competition law, marriage agreements deal with personal contracts, and creating safe business transactions is relevant to commercial law but not specifically tied to champerty. This clarity about the nature of champerty is essential for recognizing its implications in legal practice and business law.