New Contract By A Debtor to Pay His Pre-existing Debt

Abstract

It is generally held that a new promise by a debtor to his creditor to pay an overdue debt in installments is not a sufficient consideration for any return promise by the creditor. In jurisdictions following this rule, a new bilateral agreement between a debtor who promises to pay in installments and a creditor who promises forbearance is not valid. In Hay v. Fortier (1917) 102 Atl. 294, the Supreme Court of Maine fully endorses this rule, but it proceeds to hold that the new promise of the debtor becomes binding by estoppel as soon as the creditor has actually forborne in accordance with his invalid promise to forbear.