Please discuss the following two scenarios: Both scenarios consist of a loan of $1000 on Jan.1 - to be paid back on Dec. 31. A is the lender and B is the debtor.

Scenario 1: On Nov. 7th, A calls B to see how he is doing. B says he is not doing well. A asks if B will be able to pay the $1000 on Dec. 31. B says probably not. A asks how much B will have and B says about $700. A tells B to pay him $700 on Dec. 31 and that he will not owe him the additional $300. A puts it in writing. On Dec. 31, B pays the agreed upon $700. Then on January 15th, A calls B and tells him that he wants the additional $300.

Scenario 2: Same situation, but on the Nov. 7th phone call, A tells B to pay him the $700 now and then he will not owe him the additional $300. It is put in writing. B pays $700 on Nov. 7th. Then on January 15th, A calls B and tells him that he wants to additional $300. In which scenario can A get the additional $300.

In which scenario can A get the additional $300? It could be in both scenarios, neither or one of them. What do you think?

When A creates a deal of B paying only $700 now or on 31st December with a written commitment that he will not owe $300, it means A has decided to write off the $300. Had A not created any written document and just asked B to pay $700 now and then later on reminded and demanded $300 it would have been fine. A would still be legally right in maintaining that B still owes the balance $300.

However, giving a written commitment of waving off the $300 on payment of $700 now or by 31st Dec which B accepts and also adheres to by paying means that B has fulfilled the new agreement. As A has only floated the new agreement, he cannot go back from his own statements.