What is the effect of a partial payment?

In Texas, a partial payment can have a variety of effects depending on the situation. Generally, if a contract is breached and the non-breaching party paid a partial payment before the breach occurred, the non-breaching party is entitled to a refund of the partial payment. This is known as a "partial payment defense". In other situations, a partial payment may have a more ambiguous effect on the contract. For example, if the contract is based on a fixed price, a partial payment could be considered an acceptance of the full amount due. This is known as an "acceptance of partial performance" and can have the effect of binding the parties because the partial payment indicates the payment of the full amount due. Finally, if both parties have agreed upon a payment plan prior to the breach, a partial payment might act as a waiver of the right to sue for damages. In this case, the partial payment can be evidence of a good faith effort to settle the contract. Overall, the effect of a partial payment is largely determined by the specific facts and circumstances surrounding the agreement and breach of contract. If the parties do not agree on what the payment signifies, the matter may have to be resolved in court.

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What is the effect of a partial payment?

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