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

Let's lay out the scenario and the answer choices in plain terms before evaluating each option.
The question describes Jens owing $5000 to JC Builders. Jens offers to settle for $3000 in full settlement. JC Builders accept the $3000, but a week later they try to claim the remaining $2000. The core legal issue is whether JC Builders can still demand the extra $2000 despite the accepted settlement, and which legal doctrine governs that outcome.
Option a: 'Yes, but only if JC Builders agree to carry out further work for the $2,000.' This suggestion relies on a continuing performance or a fresh consideration tied to doing more work. However, the critical point here is whether the initial compromise (accepting $3000) can be enforced to prevent recovery of the remaining $2000, not whether extra work would revive the debt. In most common-law contexts, the mere agreement to settle for less does not depend on future work to be enforceable, and this option ignores the core issue of enforceability of the compromise itself.
Option b: 'Yes, a promise to accept payment of a smaller sum of money than owed is not enforceable because the consideration is past.' This statement confuses the role of consideration with the enforceability of a compromise. While traditional contract principles require consideration for variation, many jurisdictions do recognize a bona fide compromise of a debt even if the debtor’s performance (the money) has already occurred or is in the past in other contexts. Moreover, the decisive factor here is not past consideration alone but whether promissory estoppel or similar doctrine can enforce the compromise despite potential lack of fresh consideration. So this option misstates the controlling doctrine and overemphasizes past consideration.
Option c: 'No, because Jens' payment is in full settlement of the debt.' This option asserts the settlement is final and cannot be revisited. Yet, the problem lies in whether a creditor can be prevented from later claiming the remainder on the basis of promissory estoppel or other equitable principles. Merely stating it is in full settlement without addressing the protective doctrine does not explain why it would necessarily bar the claim. It also overlooks the possible reliance and equity considerations that might allow enforcement to be reduced under other theories.
Option d: 'No, because the doctrine of promissory estoppel would apply.' Here, the focus is on promissory estoppel: JC Builders relied on Jens's promise to accept $3000 as full settlement, and accepting that amount may have induced their forbearance or other actions. If promissory estoppel applies, it can prevent the creditor from seeking the remaining $2000 despite the original debt, because it would be inequitable to allow reversal of the reliance on the promise to settle for less. This answer correctly identifies a downstream equitable principle that can bind both parties in this settlement scenario, especially where the creditor’s acceptance and forbearance were influenced by the promise of a reduced payoff.
In summary, option a misreads the structure of settlement without invoking the key doctrine; option b misstates how consideration and settlement interact and undervalues equitable remedies; option c treats the settlement as an absolute bar without considering reliance-based protections; option d accurately points to promissory estoppel as the reasoning that would prevent JC Builders from recovering the leftover amount when they relied on Jens’s settlement offer.

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?

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