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The word “passive” denotes a lack of action. Some common uses of the term “passive” in a legal sense include:

  • A “passive breach of contract” is where a person neglects to do what they are obligated under a contract.

  • “Passive negligence” refers to a failure to do something that should have been done, such as the failure to discover a dangerous condition or to perform a duty imposed by law. 

  • A “passive trust” is one which does not impose upon the trustee any duty or responsibility and merely involves the holding of the title for the benefit of another.

  • “Passive concealment” is where a seller knows of a defect in the item they are selling and does nothing to prevent the buyer from discovering it but does not disclose the existence of the defect.

  • “Passive income” is income derived through investment, capital appreciation, the efforts of others, or other ventures which require little or no active effort or management. 

[Last updated in August of 2020 by the Wex Definitions Team]