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9-13 Release and Substitutions of Obligation

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CHAPTER 9-13RELEASE AND SUBSTITUTIONS OF OBLIGATION9-13-01.Extinction of obligation by release.An obligation is extinguished by arelease therefrom given to the debtor by the creditor upon a new consideration, or if the release<br>is in writing, with or without a new consideration.9-13-02. Extension to known claims. A general release does not extend to claimswhich the creditor does not know or suspect to exist in the creditor's favor at the time of executing<br>the release, which if known by the creditor, must have materially affected the creditor's<br>settlement with the debtor.9-13-03.Joint debtors - Effecting release.A release of one of two or more jointdebtors does not extinguish the obligations of any of the others unless they are mere guarantors.<br>Such release does not affect the right of the joint debtors to contribution from the party so<br>released.9-13-04. Accord defined. An accord is an agreement to accept in extinction of anobligation something different from or less than that to which the person agreeing to accept is<br>entitled.9-13-05. Satisfaction defined. Acceptance by the creditor of the consideration of anaccord extinguishes the obligation and is called satisfaction.9-13-06. Only full execution of accord extinguishes obligation. Though the partiesto an accord are bound to execute it, yet it does not extinguish the obligation until it is executed<br>fully.9-13-07.Part performance accepted in writing extinguishes obligation.Partperformance of an obligation, either before or after a breach thereof, when expressly accepted by<br>the creditor in writing in satisfaction, or rendered in pursuance of an agreement in writing for that<br>purpose, though without any new consideration, extinguishes the obligation.9-13-08.Novation defined.Novation is the substitution of a new obligation for anexisting one.9-13-09. Novation - Created by contract. Novation is made by contract and is subjectto all the rules concerning contracts in general.9-13-10. How novation made. Novation is made by the substitution of:1.A new obligation between the same parties with intent to extinguish the old<br>obligation;2.A new debtor in the place of the old one with intent to release the latter; or3.A new creditor in place of the old one with intent to transfer the rights of the latter to<br>the former.9-13-11. Rescinding acceptance. When the obligation of a third person or an orderupon such person is accepted in satisfaction, the creditor may rescind such acceptance if:1.The debtor prevents such person from complying with the order or from fulfilling the<br>obligation;2.At the time the obligation or order is received, such person is insolvent and this fact<br>is unknown to the creditor; orPage No. 13.Before the creditor with reasonable diligence can present the order to the person<br>upon whom it is given, that person becomes insolvent.Page No. 2Document Outlinechapter 9-13 release and substitutions of obligation