1. Definition 2. Duty of Debtor 3. Negotiable Instrument as Payment 4. Note of Third Person 5. Forged Notes or Counterfeit Money 6. Standing of Receipt 7. Application of Payments 79. DISCHARGE BY IMPOSSIBILITY OF PERFORMANCE 1. Performance of Promises Required-Exceptions 80. DISCHARGE BY OPERATION OF LAW 1. Alteration 2. Merger 3. Loss 4. Bankruptcy " 75. Introduction. Before discussing the discharge of a contract it will be well to recall the ways by which the contractual relationship is brought about. The fundamental principle of allowing everything except what is forbidden is found here to be an underlying principle. What parties have agreed to do they may also agree not to do, but each new agreement must be based on a sufficient consideration. When suit is brought by a claimant the other party must defend himself. All the right is not necessarily on the side of the party bringing suit. The reason why a party refuses to perform his part of an agreement may be because the other party has not done as he agreed to do. An agreement 76. Ways of Discharge. 1. Agreement. may relate to everything that is legal. If a contract is executory in its nature it may be mutually dissolved, eath release being the consideration upon which the other relies. If the contract is executed in part or wholly on one side, no mere release will be sufficient; it will not be based on a consideration. A, for instance, agrees to deliver to B 100 bushels of wheat, if B will agree to work for A 50 days. The wheat is partly or wholly delivered. It is then agreed that the contractual relationship shall cease. Still, notwithstanding this agreement, B may sue for the value of the wheat delivered. 2. New Agreement. By the common consent of the parties a new agreement, or one materially changed in part, may be substituted for the old one, the new rights and liabilities being sufficient consideration for those released. As to whether an oral agreement shall be allowed to be substituted for an old one, depends upon statutory requirements. Generally, any form of contract may be changed by an oral agreement, particularly where the agreed changes have first been acted upon by the parties. 3. Implication. This new agreement may be by implication. Wherever the parties carry out an agreement in ways that are inconsistent with the former agreement, the change will be understood to have resulted from a new agreement. While these new agreements more frequently relate to the subject matter, they may equally well relate to the consideration or the parties—in the first by increasing or decreasing the consideration, and in the last by a substitution of some third party. A, for example, owes B $50 and B owes C $50. The parties agree that A is to pay C the amount. B is cleared from indebtedness and C's claim is against A. A substitution similar to the above may arise from implication, as where A and B agree that A shall be liable to C. The latter has a right to object, but if he accepts part or whole payment from A, treating it as A's debt, it will be implied that he agrees to the substitution. 4. Conditions. The relationship between the parties may be based on a condition, the happening or non-happening of which is to have a certain effect on the contract. If this condition to a contract is not fulfilled the party aggrieved may, as a rule, treat the contract as discharged. If goods received are not up to conditions stated, they may be returned within a reasonable time. The conditions that enter into contracts are well illustrated in a bond. Here one party obligates himself that in the non-happening of a certain event he is to assume certain liability; at the happening of the event his bond is terminated. 5. Performance. When the terms of the contract have been fulfilled the parties are released, the contractual relationship between them having then been completed-each has received that for which he contracted. Each party, however, must have lived up to the agreement in order to have a complete performance. One party may be able to show performance while the other may not. In carrying out the provisions of a contract it is generally sufficient if the contract is substantially performed. When you have done what you agreed to do you may plead performance and escape liability from damages. If the contract has been executed on one side only, it is not discharged by the one entitled to claim the benefit saying that he waives his right. A release must have a consideration unless executed under seal. A agrees to work for B one month in payment for 100 bushels of wheat. At the end of the time he receives 75 bushels and then says he will waive his claim for the balance. This last agreement is not binding, as there is no consideration to support it. 77. Tender. The right to insist that A shall live up to his agreement depends upon whether B has performed his part. You may sue in enforcement of a right only when your part is performed. A agrees to sell and deliver a certain horse to B in consideration of B's paying $100. This is a contract. A now has acquired a right to the money, B has acquired a right to the horse. Neither has a right, however, to sue the other or insist on the other's carrying out the agreement until he has himself performed what he agreed to do. If A delivers the horse to B, he may then sue for the money, or B may offer the money and demand the horse. 1. Definition. Tender is the offering or attempting to do what you agreed to do. It is very important to know that in order to perfect a right you must first make a tender; your obligation may be to do something or to pay something. When in some contested case you may employ counsel, you may at once be asked the question, "Have you made a tender?" "No." Then your right may be lost. 2. Requisites: In tendering payment the following points. must be observed: First. The tender must be in the exact amount due. Second. It must be unconditional. Third. It must be in the legal currency of the country. Fourth. It must be actually offered, so as to afford an opportunity to accept or reject. Fifth. It must be kept alive; that is, you must be ready to pay it at any time subsequent to the first offering. 3. Obligation to Pay. In all cases it is the duty of the debtor to seek the creditor at the proper place and offer the exact sum of money on the date due. You have then made a good tender. If the money is of the kind sanctioned by law you have made a legal tender. The tender must be without conditions. You have not even the right to demand a receipt as a condition precedent to your paying. If, however, you are paying a note or a draft, you have a right, to demand the cancelled instrument as a receipt. You must offer the money to the creditor. It is not enough to say, "I want to pay my account." The money must be produced and offered. (a) Legal Tender. The following are the amounts and kinds of money that have legal tender properties: (2) Silver dollars, any amount; fractional silver, in amount not to exceed ten dollars. (3) Copper and nickel coins, not to exceed twenty-five cents. (4) Greenbacks, any amount; not legal tender, however, for duties or for interest on public debt. (5) Treasury notes, any amount. National Bank currency, it will be noted, is excluded. If a tender of this kind of money, or of a larger amount of any other currency that the creditor is not obliged to accept, is accepted, he cannot afterward object to the kind or amount of the currency thus offered. As soon as a legal tender is made it stops the accumulation of interest on a claim, and if the tender is kept good by the debtor's |