Is The Mutual Agreement Of Less Than What Has Been Billed To The Debtor
Composition of the creditorAn agreement between creditors, each accepting less than the full payment of a debtor, so that each receives something. can lead to a settlement of the debt by agreement and satisfaction. It is an agreement where by which two or more creditors of a debtor agree that the debtor will pay them shares in proportion to the debt due for the full payment of their claims. A composition agreement can be essential for a company in difficulty. This would allow the company to avoid bankruptcy. Although the accepted share is less than the full amount due and is payable after the due date, it appears that there is no consideration, the courts routinely impose these agreements. The promise of each creditor to accept a lower share than that due in return for something is considered in return for support for the promises of others. A debtor has $3,000 at his disposal. He owes $3,000 each to A, B and C.
A, B and C agree to each accept $1,000 and to reduce the burden on the debtor. Each creditor gave up $2,000, but in exchange, he at least received something, the $1,000. Without the composition, one might have received the full amount owed to him, but the others would have received nothing. Whatever their original historical purposes, however mysterious they may be, the doctrine of consideration serves purposes that are still useful. it provides objective evidence of the allegation of a contract; the distinction between enforceable and non-enforceable agreements; And it is a cheque against hasty and thoughtless actions, against ill-thought-out promises. Lon L. Fuller, “Consideration and Form,” Columbia Law Review 41 (1941): 799. The main difference between an agreement and a novation is based on the intention of the parties.
See Paramount Aviation Corp. v. Agusta, 178 F.3d 132 (3d Cir. N.J. 1999). An agreement and satisfaction is a replacement contract to settle a debt with an alternative to full payment. The counterpart of an agreement is often the solution to a contentious request. While, in a novation, the new promise itself meets the already existing requirements, it is, in an agreement, the fulfillment of the new promise that fulfills the already existing duty. The peculiarity of an agreement and satisfaction is that the debtor does not intend to satisfy the existing right at the mere time of issuance of the agreement. You or he can only do this in case of performance or satisfaction.
If satisfaction is not offered, the debtor may bring an action under the original law or for breach of the agreement. .