1911 Encyclopædia Britannica/Payment

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PAYMENT (Fr. paiement, from payer, to pay; Lat. pacare, to appease, pax, peace), the performance of an obligation, the discharge of a sum due in money or the equivalent of money. In law, in order that payment may extinguish the obligation it is necessary that it should be made at a proper time and place, in a proper manner, and by and to a proper person. If the sum due be not paid at the appointed time, the creditor is entitled to sue the debtor at once, in spite of the readiness of the latter to pay at a later date, subject, in the case of bills and notes, to the allowance of days of grace. In the common case of sale of goods for ready money, a right to the goods vests at once upon sale in the purchaser, a right to the price in the seller; but the seller need not part with the goods till payment of the price.

Payment may be made at any time of the day upon which it falls due, except in the case of mercantile contracts, where the creditor is not bound to wait for payment beyond the usual hours of mercantile business. If no place be fixed for payment, the debtor is bound to find, or to use reasonable means to find, the creditor, unless the latter be abroad. Payment must be made in money which is a legal tender (see below), unless the creditor waive his right to payment in money by accepting some other mode of payment, as a negotiable instrument or a transfer of credit. If the payment be by negotiable instrument, the instrument may operate either as an absolute or as a conditional discharge. In the ordinary case of payment by cheque the creditor accepts the cheque conditionally upon its being honoured; if it be dishonoured, he is remitted to his original rights. If payment be made through the post, in a letter properly directed, and it be lost, the debt is discharged if there was a direction so to transmit the money. The creditor has a right to payment in full, and is not bound to accept part payment unless by special agreement. Part payment is sufficient to take the debt out of the Statute of Limitation. It is a technical rule of English law that payment of a smaller sum, even though accepted by the creditor in full satisfaction, is no defence to a subsequent action for the debt. The reason of this rule seems to be that there is no consideration for the creditor foregoing his right to full payment. In order that payment of a smaller sum may satisfy the debt, it must be made by a person other than the person originally liable, or at an earlier date, or at another place, or in another manner than the date, place, or manner contracted for. Thus a bill or note may be satisfied by money to a less amount, or a money debt by a bill or note to a less amount; a debt of £100 cannot be discharged by payment of £90 (unless the creditor execute a release under seal), though it may be discharged by payment of £10 before the day appointed, or by a bill for £10. Payment must in general be made by the debtor or his agent, or by a stranger to the contract with the assent of the debtor. If payment be made by a stranger without the assent of the debtor, it seems uncertain how far English law regards such payment as a satisfaction of the debt. If the debtor ratify the payment, it then undoubtedly becomes a satisfaction. Payment must be made to the creditor or his agent. A bona fide payment to an apparent agent may be good, though he has in fact no authority to receive it. Such payment will usually be good where the authority of the agent has been countermanded without notice to the debtor. The fact of payment may be presumed, as from lapse of time. Thus payment of a testator’s debts is generally presumed after twenty years. A written receipt is only presumptive and not conclusive evidence of payment. By the Stamp Act 1891 a duty of one penny is imposed upon a receipt for or upon the payment of money amounting to £2 or upwards, and also a fine of £10 upon any person who, in any case where a receipt would be liable to duty, refuses to give a receipt duly stamped. If payment be made under a mistake of fact, it may be recovered, but it is otherwise if it be made under a mistake of law, for it is a maxim of law that ignorantia legis neminem excusat. Money paid under compulsion of law, even though not due, cannot generally be recovered where there has been no fraud or extortion. For appropriation of payments see Appropriation.

Payment Into and Out of Court.—Money is generally paid into court to abide the result of pending litigation, as where litigation has already begun, as security for costs or as a defence or partial defence to a claim. Payment into court does not necessarily (except in actions for libel and slander) operate as an admission of liability. Payment into court is regulated by the Rules of ths Supreme Court, O. xxii. The fact that money has been paid into court may not be mentioned to a jury. Money may sometimes be paid into court where no litigation is pending, as in the case of trustees. Payment of money out of court is obtained by the order of the court upon petition or summons or otherwise, or simply on the request or the written authority of the person entitled to it.

Payment of Wages.—The payment of wages to labourers and workmen otherwise than in coin is prohibited. See Labour Legislation: Truck. Domestic or agricultural servants are excepted. Payment of wages in public-houses (except in the case of domestic servants) is illegal.

Tender.—This is payment duly proffered to a creditor, but rendered abortive by the act of the creditor. In order that a tender may be good in law it must as a rule be made under circumstances which would make it a good payment if accepted. The money tendered must be a legal tender, unless the creditor waive his right to a legal tender, as where he objects to the amount and not the mode of tender. Bank of England notes are legal tender for any sum above £5, except by the bank itself. Gold is legal tender to any amount, silver up to 40s., bronze up to 1s. (Coinage Act 1870). Any gold coinage, whether British, colonial or foreign, may be made legal tender by proclamation. The effect of tender is not to discharge the debt, but to enable the debtor, when sued for the debt, to pay the money into court and to get judgment for the costs of his defence.

Scotland.—The law of Scotland as to payment agrees in most points with that of England. Where a debt is constituted by writ payment cannot be proved by witnesses; where it is not constituted by writ, payment to the amount of £100 Scots may be proved by witnesses; beyond that amount it can only be proved by writ or oath of party. The term tender seems to be strictly applied only to a judicial offer of a sum for damages and expenses made by the defender during litigation, not to an offer made by the debtor before litigation. Bank of England notes are not a legal tender in Scotland or in Ireland.

United States.—In the United States the law as a rule does not materially differ from English law. In some states, however, money may be recovered, even when it has been paid under a mistake of law. The question of legal tender has been an important one. In 1862 and 1863 Congress passed acts making treasury notes legal tender (see Greenbacks). After much litigation, the Supreme Court of the United States decided in 1871 (Knox v. Lee) in favour of the constitutionality of these acts, both as to contracts made before and after they were passed. These notes are legal tender for all purposes except duties on imports and interest on the public debt. All gold coins and standard silver dollars are legal tender to any amount. Silver coins below the denomination of a dollar are legal tender up to $10, and cent and 5-cent pieces legal tender to an amount not exceeding 25 cents. It falls exclusively within the jurisdiction of Congress to declare paper or copper money a legal tender. By the constitution of the United States, “no state shall . . . make anything but gold and silver coin a tender in payment of debts” (art. i. § 10).  (T. A. I.)