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ii

This constitutes an accord and satisfaction

iii

This applies even where there is an UNDISPUTED part of the disputed whole debt.  Payment of undisputed part in form of full-payment check extinguishes whole debt

b

Undisputed debt rule:

i

Payment of part of an undisputed debt does not discharge debt, even when it is expressly agreed that the partial payment is rec’d in full satisfaction.  This is true b/c no consid — payor already had legal duty to pay

c

Offset rule: When amount of debt is undisputed but offset is claimed out of the same contract, debt is a single claim which is disputed in amount --> payment in full sett’t of less than amount claimed discharges debt

2

UCC (§ 3-311(a)-(b)): full payment check extinguishes debt if ELTS:

a

Check tendered in good faith as full satisfaction

b

Amount of claim is either unliquidated or the subject of a bona fide dispute

c

Claimant actually obtains payment on the check (i.e., cashes it)

d

Check or underlying writing contains conspicuous stmt to effect of full satis

Consideration — Exceptions, Accord & Satisfaction

I

Enforcement despite lack of consideration

A

Four ways:

1

Reliance — did the promisee rely on the promise to his detriment?

2

Past or moral consideration — was the promise given in recognition of a material benefit previously conferred?

3

Waiver — did the promise merely waive a nonmaterial condition under a bargain?

4

Form (seal) — was the promise in a special legal form?

B

Reliance — did the promisee rely on the promise to his detriment?

1

Some cts will limit recovery under promissory estoppel to rel dams

2

Promissory estoppel.  (Feinberg) (Rest § 90)

a

May make a promise binding in absence of consideration for the promise

b

ELTS

i

PROMISE

ii

R’BLE EXPECTATION that promise will induce action or omission

iii

Actual action or omission BASED ON THE PROMISE

iv

Failing to enforce promise will result in INJUSTICE

c

Note that K enforced by promissory estoppel can get EXP DAMS just like any other K.  Fact that promissory estoppel is used does not mean you’re limited to restitution

C

Past consideration — was the promise given in recognition of a material benefit previously conferred?

1

Traditional rule = unenforceable despite past consideration b/c no present consid; merely donative

2

Exceptions

a

Promise to pay debt barred by S/L enforceable despite no new consid BUT must be in writing.  (Rest § 82)

i

But only present promise enforceable — so if promise only to pay part of old debt, only that part enforceable

b

Promise to perform voidable obl enforceable despite no new consid.  (Rest § 85)

i

Ex: orig promise induced by fraud or given during minority

c

Promise to pay debt discharged by bankruptcy.  (Rest § 83)

i

Similar to S/L rule, but NEED NOT BE IN WRITING

3

Modern rule: promise to pay moral obligation arising out of past econ benefit conferred

a

With no past service rendered, there is no consideration given, so promise not enforceable.  (Mills)

6

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