Question

Bobby built a dog house for Rhonda and Rhonda agreed to pay Bobby 1,500. Rhonda sends Bobby a check for 1,000 with a note that says 'this is all I can pay you.' Bobby cashes the check. Which of the following is true?

1) The 1,500 is liquidated debt.
2) Rhonda does have to pay Bobby the remaining 500.
3) Rhonda does not have to pay Bobby the rest of the 500.
4) There is no dispute that Rhonda owes Bobby 1,500.

Answer 1

Rhonda's debt to Bobby for building a dog house is a liquidated debt. Cashing the check without an agreement that $1,000 is full payment does not necessarily settle the entire debt; thus, Rhonda could still owe Bobby the outstanding $500.

Step-by-step explanation:

The student's question concerns the legal consequences of Rhonda's partial payment of a debt owed to Bobby for constructing a dog house. The scenario presents a situation where Rhonda has paid $1,000 on a $1,500 agreement, claiming this is all she can pay.

Two important legal concepts are in play here - liquidated debt and accord and satisfaction. A liquidated debt is a debt where the amount owed is agreed upon by both parties and is unconditional and certain. Since Rhonda and Bobby agreed on the price of $1,500 initially, it is a liquidated debt.

Accord and satisfaction might occur if a debtor offers a lesser amount than what's owed and the creditor accepts the payment as full satisfaction of the debt. However, for this to be legally binding, the creditor (Bobby) must agree to accept the lesser amount as full payment. Simply cashing the check may not constitute such an agreement, especially if there was no clear communication that the lesser amount was accepted as full payment; this depends on jurisdiction-specific laws. Therefore, unless Bobby explicitly agreed that the $1,000 was full payment, Rhonda might still owe the remaining $500.