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Payment in Property

A liquidated money demand can be discharged by an accord and satisfaction by delivery of property, or by providing  part money and part property to the creditor.  For discharge of debt by payment in property there should be consent of the parties as to full discharge of the indebtedness.  If the creditor is otherwise entitled to the property given by the debtor at the time when the property is delivered, the debt will not be discharged.

In, Tremont Electric Co. v. Lang,[i] court held that, if the debtor gives to the creditor certain property in full satisfaction and the value of the property is not as agreed between the debtor and creditor, and the creditor accepts such property without objection, he cannot thereafter complain that the property taken was in fact worth less than the amount of the balance due.

In Casper Nat’l Bank v. Woodin,[ii] the mortgage agreement between the parties provided that in case of default the mortgagee may take immediate possession of the mortgaged property and sell it.  The mortgagor was in default at the time of the accord agreement. The court held that there is no accord and satisfaction of a debt for which a chattel mortgage is given.

[i] 16 Misc. 2d 983 (N.Y. Mun. Ct. 1959)

[ii] 68 Wyo. 232 (Wyo. 1951)

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