Legal Definitions - giving in payment

Giving in Payment refers to a situation in civil law where a debt is settled by the debtor providing something different from what was originally agreed upon, and the creditor accepts this alternative as full satisfaction of the debt.

Essentially, instead of paying exactly what was promised (e.g., a specific amount of money), the debtor offers, and the creditor agrees to receive, a different asset or service to fully clear the outstanding obligation.

Here are some examples illustrating "giving in payment":

• Example 1: Business Debt Settlement

  A small manufacturing company owes its raw material supplier $25,000 for a recent shipment. Due to unexpected cash flow issues, the manufacturing company proposes to give the supplier a piece of specialized machinery, which they no longer use but is valued at $25,000, in full settlement of the debt. The supplier, recognizing the machinery's utility for their own operations, agrees to accept it instead of the cash payment.

  This illustrates "giving in payment" because the original debt was for $25,000 in cash, but it was discharged by providing a different asset (the machinery) with the supplier's consent.

• Example 2: Personal Loan Repayment

  Liam borrowed $3,000 from his friend Chloe to help cover an emergency expense. When it's time to repay the loan, Liam is struggling financially but owns a vintage bicycle that Chloe has always admired, valued at $3,000. Liam offers the bicycle to Chloe as full repayment for the loan, and Chloe, understanding Liam's situation and appreciating the bicycle, accepts it.

  Here, the original debt was a $3,000 cash loan. It was settled by Liam giving Chloe a different item (the vintage bicycle), which Chloe agreed to accept as full payment.

• Example 3: Service Contract Resolution

  A marketing agency completed a branding project for a new restaurant, with an agreed fee of $10,000. When the invoice is due, the restaurant owner explains they are experiencing initial startup delays and offers the marketing agency a $12,000 credit for catering services and private dining events at the restaurant, which the agency frequently hosts for clients. The marketing agency, seeing value in the catering credit, agrees to accept it as full payment for the branding project.

  This demonstrates "giving in payment" because the debt for the marketing services (originally $10,000 cash) was discharged by the restaurant providing a different form of value (catering credit) that the marketing agency consented to receive.