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he impliedly promises to free debtor of any remaining balanceIf creditor crosses out and writes “under protest” and deposits check, doesn’t matter because it implies acceptance•Liquidated debts – no genuine basis for a good faith dispute as to the existence or amount of indebtedness (e.g. sales transaction)oCompromise agreements less frequently binding because debtor had “pre-existing duty” to pay•Compromising agreementsoComposition agreements – debtor makes agreement with tow or more creditors, under terms of which he or she agrees to pay each creditor who joins in agreement a stated percentage of that person’s claim with creditors agreeing in return to accept percentage as full satisfaction of their claims; binding even though creditors each receives a sum less than originally owedSpecial SituationsPromissory Estoppel•“Justifiable reliance”oPromisor makes a promise under circumstances in which he or she should realize that the promisee is almost certainly going to rely on the promise in a particular way, and if promisee does so rely, thereby causing a substantial change in his or her position, promisor is bound by promiseFormal Promises to Charitable Institutions•Courts enforce promises to charities by:oInvention of consideration, by finding that each donor’s promise is made in consideration of the promises of other donorsoPromissory estoppel, by finding that donors should foresee that donee institution will rely on promised gift, for example, by drawing up plans and beginning constructionoWhere all else fails, many courts will simply enforce promise on grounds of public policyPromises Made Subsequent to the Running of a Statute of Limitations•Statues of limitations – limits time a creditor has in which to bring suit against debtor after debt becomes due; contract becomes unenforceable after time limit
•New promise to pay (in all or a portion of original debt)oEnforceable if in writing; debt considered “revived” and creditor has new statutory period•Part payment or acknowledgementoIf debtor sends partial payment or acknowledges debt exist after statute of limitations, obligations to pay is revived and creditor has another 5 years to commence legal action for balance
Chapter 13 Illegality•Courts do not generally enforce illegal contracts •Contracts are illegal bc:oContrary to state’s statutes and regulationsoContrary to public policy of state as defined by court •Illegal contracts are void meaning:oIn cases where contract is entirely executory, neither party is bound by agreementoIn cases where one of parties has performed his or her part of the bargain, such party cannot recover consideration or value of consideration that has passed to other partyContracts Contrary to StatutesWagering Agreements•Gambling contracts void•Bets and lotteries – ok within narrow limit•Insurance contractsoRisk-shifting contracts – enforceable because owner had “insurable interest” prior to taking out policyo