Sue owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year.She has been offered a two-year graduate fellowship,but she will not be able to pay the loan back if she accepts the fellowship.The bank manager tells Sue that if she pays $3,000 now,they will forgive the loan.Should Sue accept the offer?
A) No,because the bank can still sue for the remaining $2,000
B) No,because the manager's promise is not binding on the bank
C) Yes,because the early payment of the loan is consideration that makes the bank's promise binding
D) Yes,because the bank must do whatever the manager says

Question

Quizplus · Accepted Answer

The offer made by the bank manager is a promise to forgive the loan in exchange for an immediate payment of $3,000. This payment is considered as consideration and creates a binding contract between Sue and the bank. As long as Sue pays the agreed amount, the bank cannot sue for the remaining balance. Therefore, Sue should accept the offer.

Sue Owes $5,000 to the First National Bank for a Student