Jens owes JC Builders $5000. On discovering that JC Builders are in financial difficulty Jens offers to pay them $3,000 in full settlement of the debt. JC Builders agree to accept the $3,000 but a week later, claim the remaining $2,000. Will JC Builders succeed in their claim?

Question

BlackTom AI · Accepted Answer

Question restatement and options:
- Question: Jens owes JC Builders $5,000. Jens offers to settle for $3,000 in full satisfaction. JC Builders agree to accept $3,000, but a week later they claim the remaining $2,000. Will JC Builders succeed in their claim?
- Answer options:
  a. No, because Jens' payment is in full settlement of the debt.
  b. Yes, but only if JC Builders agree to carry out further work for the $2,000
  c. No, because the doctrine of promissory estoppel would apply.
  d. Yes, a promise to accept payment of a smaller sum of money than owed is not enforceable because the consideration is past

Option-by-option analysis:
Option a:
- This statement asserts that the $3,000 settlement is a full settlement of the debt, and therefore the remaining $2,000 cannot be pursued. The legal mechanism at play is typically an accord and satisfaction: the debtor offers to settle a disputed or undisputed debt for a lesser amount, and the creditor accepts the lesser amount as full payment. Once the creditor accepts and the debtor pays the lesser amount, the creditor generally cannot later claim the remaining balance, because the agreed settlement discharges the remaining debt. This option correctly recognizes that the settlement can discharge the full amount owed, assuming the agreement is valid and the creditor genuinely accepts it as full satisfaction.

Option b:
- This option introduces a condition: that JC Builders must receive additional work for the $2,000. However, the factual scenario does not mention any new consideration or exchange of promises for additional work. In accord and satisfaction, the key question is whether there was a valid agreement to settle the debt for a lesser amount. The mere assertion of additional work as a condition would require fresh consideration and a new contract; without such a show of consideration, this option is not supported by the facts given.

Option c:
- This option suggests promissory estoppel would prevent JC Builders from later claiming the shortfall. Promissory estoppel can prevent a party from retracting a promise if there is a clear reliance that is foreseeable and there is some justice in enforcing the promise. However, promissory estoppel is not typically invoked to defeat a creditor’s right to recover the remaining debt after an accord and satisfaction has occurred. In this scenario, the better framework is accord and satisfaction rather than promissory estoppel, making this reasoning unlikely to prevail.

Option d:
- This option states that the promise to accept a smaller sum is not enforceable because the consideration is past. This is a mischaracterization of how accord and satisfaction works. The crucial element is the exchange of consideration: the debtor gives up the right to pursue the full amount, and the creditor gives up the right to the remaining balance in return for the lesser payment. The consideration is not past; it is contemporaneous with the agreement to settle. Therefore this statement is factually incorrect about the nature of consideration in this context.

Summary of the reasoning across options:
- Option a correctly captures the core idea that a valid accord and satisfaction can discharge the entire debt, preventing a further claim for the remaining $2,000, provided the settlement was accepted as full satisfaction and properly executed.
- Option b introduces unsupported extra consideration (more work for the remaining amount) that is not present in the facts, making it unlikely.
- Option c misapplies promissory estoppel as a reason to defeat the creditor’s claim after an accord, which is not the typical or strongest basis here.
- Option d inaccurately claims the issue is past consideration, which does not align with how accord and satisfaction works in this scenario; the settlement’s validity rests on the exchange of consideration for the reduced amount, not on past consideration.

Overall, the reasoning supports that JC Builders would not succeed in reclaiming the remaining $2,000, based on the concept of accord and satisfaction and the validity of settling for a lesser amount with acceptance as full discharge.

MCD2070 - T2 - 2025 Intention and Consideration Quiz

Jens owes JC Builders $5000. On discovering that JC Builders are in financial difficulty Jens offers to pay them $3,000 in full settlement of the debt. JC Builders agree to accept the $3,000 but a week later, claim the remaining $2,000. Will JC Builders succeed in their claim?

View Explanation

Log in for full answers

Similar Questions

Andre owes Brendan $180. Brendan is offered $100 by Andre as full and final settlement. Brendan accepts this offer. Which one of the following is most correct?

Andre owes Brendan $180. Brendan is offered $100 by Andre as full and final settlement. Brendan accepts this offer. Which one of the following is most correct?

Andre owes Brendan $180. Brendan is offered $100 by Andre as full and final settlement. Brendan accepts this offer. Which one of the following is most correct?

Andre owes Brendan $180. Brendan is offered $100 by Andre as full and final settlement. Brendan accepts this offer. Which one of the following is most correct?

X owed Y $1,000. Under Ontario statute law if Y agrees to accept a lesser sum as payment in full then he can no longer make a claim for the full $1,000.

In a consumer society, many adults channel creativity into buying things

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler