What does defalcation refer to?

Defalcation specifically refers to the act of embezzling, where an individual misappropriates or steals funds that have been entrusted to them. This term is often used in legal and financial contexts to describe a breach of trust involving the mismanagement of money, typically in a fiduciary relationship.

In scenarios involving accountants, trustees, or others in positions of financial responsibility, defalcation indicates a failure to manage those funds appropriately, thereby causing loss to the rightful owner. It embodies the notion of betrayal of trust by an individual who holds a position of authority over the assets.

The other options mention related concepts, such as breach of contract, committing fraud, or bankruptcy, but none capture the specific legal connotation and contextual use of the term defalcation as accurately as embezzling.