Al owes Tracy $500, due June 1.Al, Tracy, and Ted mutually agree that Ted will pay Tracy instead of paying Al the money Ted owes Al, and Al will be discharged from his debt to Tracy.Such an agreement is an example of:
A)an accord.
B)a novation.
C)a satisfaction.
D)a rescission.

Question

Quizplus · Accepted Answer

This agreement is an example of novation, which is the substitution of a new contract, obligation or party for an existing one. In this case, Ted is substituted for Al as the debtor in the agreement between Al and Tracy, and Al is discharged from his debt. This requires the consent of all parties involved.

Al Owes Tracy $500, Due June 1