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CMA Foundation · Fundamentals of Business Laws and Business Communication · Discharge of Contracts

Arun owes Bhavna Rs 5,000. Bhavna agrees to accept Rs 2,000 paid at the time and place where Rs 5,000 was payable, in satisfaction of the whole debt, and Arun pays accordingly. What is the effect?

The whole debt is discharged. Under Section 63, a promisee may remit performance wholly or in part or accept any satisfaction he thinks fit. Since Bhavna accepted Rs 2,000 in full satisfaction of Rs 5,000, paid at the proper time and place, nothing further remains payable.

  1. AThe whole debt is dischargedCorrect
  2. BArun still owes the remaining Rs 3,000
  3. CThe agreement is void for want of consideration, so the debt continues
  4. DThe debt is discharged only if a court approves

Explanation

Section 63 allows every promisee to remit performance wholly or in part or to accept any satisfaction he thinks fit. Illustration (b) uses these very facts and treats the whole debt as discharged. The claim that Rs 3,000 remains ignores the promisee's power to accept lesser satisfaction.

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