Business, Legal & Accounting Glossary

Definition: Abandonment

Quick Summary of Abandonment

The act of abandoning something or someone. Abandonment is when an owner gives up all rights to an asset. This term can be used to describe the voluntary non-renewal of a patent or trademark, or the loss of rights to an asset when the owner can no longer be found.

What is the dictionary definition of Abandonment?

Dictionary Definition

n. The act of intentionally surrendering one’s claim to, right to, or interest in property, premises, contract rights, a spouse and/or children.

When a spouse is abandoned, it is assumed that the intent was for permanent separation.

Confusion may arise when rights over water, mining, and rights of way are abandoned because it is sufficient to show non-use to qualify as abandonment.

  1. Voluntary disclaim of a right or interest (without transferring it to anyone else) in a property, accompanied by a clear act of abandoning that property. Such acts include continuous lack of use and/or maintenance, and failure to pay property taxes. The abandoned property may then be claimed by an occupier (see adverse possession) or may be appropriated by the state. However, obligations (debts, liens, taxes) associated with a property are not discharged when it is abandoned and remain the liability of the owner.
  2. Donation or voluntary disposal of a business asset where it is cheaper to abandon the asset than to restore or salvage it. The book value of an abandoned asset is written off as a loss.
  3. Expiration of an option instead of its exercise or sale.
  4. Right of the owner of insured property to abandon it
    1. where its loss cannot be avoided (called actual total loss), or
    2. where the cost of repairing the damage exceeds its value (called constructive total loss). The insured party can still claim full settlement from the insurer (who becomes the owner of the abandoned property), after serving the notice of abandonment subject to the conditions of the insurance policy. Most non-marine insurance policies (such as homeowners insurance policy), however, specifically prohibit abandonment of the insured property under any circumstance.

Full Definition of Abandonment

This refers to the act of giving up the ownership of something covered by an insurance policy and treating it as if it has been completely lost or destroyed. If the insurers agree to abandonment, they will pay a total-loss claim.

This often occurs in Marine Insurance is a vessel has run aground in treacherous waters and the cost of the recovering said vessel would be greater than the cost of the vessel and all its cargo.

Abandonment is a viable option in such an instance as it’s simply not financially viable to try and recover the vessel.

Abandonment also occurs during Wartime; when a vessel is captured by the enemy.

If the owner wishes to declare a vessel (including its cargo) a total loss, then a notice of abandonment is given to the Insurer.

If subsequently, the vessel and/or its cargo are recovered at a later date, they then become the property of the insurer.



Synonyms For Abandonment

surrender, abandon, renunciation, relinquishment, resignation

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Abandonment. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 27, 2021 https://payrollheaven.com/define/abandonment/.
Chicago Manual of Style (CMS):
Abandonment. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/abandonment/ (accessed: September 27, 2021).
American Psychological Association (APA):
Abandonment. PayrollHeaven.com. Retrieved September 27, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/abandonment/

Definition Sources

Definitions for Abandonment are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 18th March, 2020 | 26 Views.