united-states contract-law debt
If a creditor refuses to accept payment for a debt, is the debt extinguished?
<p>JURISDICTION: New Hampshire, United States</p>
<p>If a creditor refuses to accept payment for a debt, is the debt extinguished?</p>
<p>I know this sounds bizarre, but some companies are no longer accepting payment for debts or other obligations unless they meet some criteria.</p>
<p>For example, recently I had a vendor refuse a check to pay for goods because there was a company name on the check and the goods had been purchased under the personal name of the agent who bought the goods, not under the company name. Crazy.</p>
<p>Anyway, from a legal point of view the check was good and was presented to pay for the goods and the vendor's refusal of the check essentially constitutes refusal to accept payment. So, what happens now? Should I consider the debt to be extinguished? Do I need to sue them to extinguish the debt??? What the heck, if they don't accept my check, I don't see how they can keep insisting I owe them money. There was no agreement I ever signed whereby I promised to pay them only out of certain bank accounts or whatever.</p>
<p>What is the law or UCC on this?</p>

<h2>it depends on the contract.</h2>
<p>Let's say Alice has a contract with Bob, formulated as follows: Alice lends Bob 20 dollars and in return, Bob repays Alice 2 dollars a week for 11 weeks.</p>
<p>The contract does not have room for an early payment of any outstanding amount. It also has no room for Charly to pay for Bob's fees. So Alice does not <strong>have</strong> to accept Bob trying to pay off all the remaining amount at once, or Charly to pay for Bob's loan. She may, but nothing forces her to accept those alterations to the contract. She can insist on the term: Bob repays Alice 2 dollars a week for 11 weeks.</p>
<p>Now, Bob presents a check for 2 dollars that is signed by Charly. Does Alice have to accept it? No. Alice is entitled to a payment <strong>from Bob</strong>. The Check is a payment that goes from Charly to whoever cashes the check. Alice is not entitled to any payment from Charly. In fact, she might not even be allowed to cash the check legally.</p>
<p>Since Alice is entitled to the payment from Bob, Bob could cash the check from Charly and then write a check to Alice. Or Bob could do a money transfer to Alice. Or he could take the cash to Alice. But she does <strong>not</strong> need to accept a check that is not a payment <em>by Bob</em>. Though, nothing forces her to accept checks to begin with, if her terms of service exclude payment by check.</p>

<h2>A contract may restrict the manner of payment</h2>
<p>All contracts implicitly limit payment to the currency in which they are denominated. So, for a contract denominated in USD, payment in EUR or CAD or Bitcoin or poppy seeds may be refused.</p>
<p>A contract may restrict payment by excluding some forms (e.g. no checks or no cash) or by specifically nominating a form (e.g. payment will be by electronic funds transfer). Such terms are binding and other types of payment may be refused.</p>
<p>If the contract is silent then the recipient may reasonably limit the types of payment they will accept. In countries where there is a legal tender law (e.g. the
<a href="https://www.law.cornell.edu/uscode/text/31/5103" rel="nofollow noreferrer">USA</a>), legal tender must be accepted unless the contract excludes it. Note that not all jurisdictions have legal tenet laws; Scotland for example and, in England and Wales, it is limited to banknotes issued by the Bank of England - notes from Scottish banks are not legal tender even though they are in GBP.</p>
<p>Offering payment of a debt in legal tender discharges it whether or not it is accepted - again, unless the contract excludes that method of payment.</p>
<h2>TL;DR</h2>
<p>The creditor is not obliged to accept that (or any other) check. You still owe the money.</p>

<p>ohwilleke was nice enough to answer this question in the comments, so I will just expand on what he wrote. Presenting a negotiable instrument does extinguish the debt if the creditor refuses it. Here is the quote from the UCC:</p>
<blockquote>
<p>2016 New Hampshire Revised Statutes<br />
Title XXXIV-A - UNIFORM COMMERCIAL CODE<br />
Chapter 382-A - UNIFORM COMMERCIAL CODE<br />
Section 382-A:3-603 - Tender of Payment.<br />
Universal Citation: NH Rev Stat § 382-A:3-603 (2016)</p>
<p>382-A:3-603 Tender of Payment.<br />
(b) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is
refused, there is discharge, to the extent of the amount of the
tender, of the obligation of an indorser or accommodation party having
a right of recourse with respect to the obligation to which the tender
relates.</p>
</blockquote>
