Question

Morgan signs an installment loan contract with her banker. The contract specifies that Morgan will pay 3.00% interest every month on the borrowed amount of $50,000 for two years. Both Morgan and the banker know the precise amount of the total obligation. This is an example of:______.

a. an accord.
b. a covenant not to sue.
c. satisfaction.
d. liquidated debt.

Answer 1

The correct answer is D

Step-by-step explanation:

Liquidated debt is the kind or form of debt which is paid. It is the amount of debt which is determined through the agreement among the parties or through the legal proceedings.

The debt is considered to be liquidated when it is certain what amount is due. So, in this case, Morgan and banker knew the amount of the aggregate obligation as the contract states. Therefore, it is a debt which is liquidated.