28. The preceding considerations will easily explain how a Debt is extinguished by a Payment in Money: which very few persons have ever thought of.

Suppose a person possesses £100, but owes £50: then his Property will be represented by £100 -.£50.

His Creditor's Right to demand will be represented by + £50.

When the Creditor demands payment of the Debt, an exchange takes place. The Creditor transfers to the Debtor his Right to demand + £50, and the Debtor gives the Creditor £50 in money.

The Debtor's Property is then £50-£50+ £50: or £50 in Money, together with the Right to demand £50 from himself and the Duty to pay £50 to himself. These two Quantities cancel and extinguish each other as before: the Right to demand, + £50, is now extinguished as an Economic Quantity, and the Debtor's Property is now £50.

The transaction is, therefore, shewn to be a Sale or an Exchange.

Thus as the Obligation, or Contract, was originally created by the Loan, or Sale, of the Mutuum, it is annihilated by the Sale or Exchange called Payment. Hence the Obligation was created by one Exchange, and is annihilated by another.