What is the effect of a partial payment?

A partial payment is when a party only pays a part of the amount they owe on a contract. The effect of a partial payment depends on the state in which the contract was entered into and the particular language used in the contract. In Nebraska, a partial payment is generally treated as an acknowledgment of the debt and an agreement that this partial payment is sufficient to fully discharge the debt if the creditor fails to make demand for the remaining balance. However, if the contract contains language that states the partial payment is to be regarded as a payment on account of the debt, then the remainder of the debt is still legally due and enforceable. The creditor may still file a lawsuit to recover the remainder of the debt. When a party makes a partial payment, they are still fully liable for the entire amount due and outstanding. For example, if a debtor makes a partial payment of $10,000, the remaining debt is still $10,000. The partial payment does not reduce the amount that is still owed. Partial payments of a debt can be complicated. For this reason, it is important to ensure that a contract specifies exactly what the effect of a partial payment is. This way, both parties have a clear understanding of the terms of the contract and can avoid any potential misunderstanding.

Related FAQs

What is the implied covenant of quiet enjoyment?
What is a void contract?
What are the common types of remedies available?
What is equitable estoppel?
What is the Statute of Limitations?
What is a rescission of a contract?
What is a contract of indemnity?
What is the Statute of Frauds applicable to?
What are the remedies for breach of contract?
What is an anticipatory breach of contract?

What is the effect of a partial payment?

Related FAQs

Related Blog Posts