This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In the narrower sense of the term, "payment" is used of the performance of contracts which by their terms are to be performed by delivering money.1 In this sense, payment in contract law is that form of performance which consists in the delivery by the promisor and receipt by the promisee of money or something delivered and accepted as the equivalent thereof in discharge of a contractual obligation.2 Payment is said to be "the discharge in money or its equivalent of- an obligation or debt owing by one person to another."3 "Payment" is a term, however, which is used in a number of different meanings. In one sense it is restricted to the discharge of a debt; but it is also extended to include anything of value which the creditor accepts from the debtor as satisfaction.4
1 The Anglo-American law, largely because of the influence of the law merchant, has made a sharp distinction for many purposes between contracts which by their terms provide for performance by delivering money and those which by their terms provide for any other kind of performance. As a result of this distinction, the performance of contracts for the payment of money is regarded as in some respects different from the performance of other contracts.
In the more restricted sense of the term, payment is limited to cases of performance of original obligation; and it is distinguished from cases of discharge by mutual agreement, such as by accord and satisfaction.5 Settlement of a debt has been said to be practically synonymous with payment,6 but this statement was made for the purpose of showing the necessity of pleading such definition especially as new matter, rather than for the purpose of comparing payment with accord and satisfaction. In the restrictive sense of the term, payment is so limited to performance of a contract for the payment of money that it can not be properly used for the satisfaction of an unliquidated claim by the payment of money.7
2 Bronson v. Rodes, 74 U. 8. (7 Wall.) 229, 19 L. ed. 141; Bartholomew v. Emerson-Brantingham Implement Co., - Colo. - , 187 Pac. 538; State v. Scarlett, 91 N. J. L. 200, 2 A. L. R. 83, 102 Atl. 160.
"'Payment' is generally understood as a discharge of the debt or obligation by a compliance with the terms of the obligation, and, if the obligation calls for a money discharge, then there can not be payment except by paying the full amount called for in money, or the representative of money." Continental Gin Co. v. Arnold, 52 Okla. 569, 153 Pac. 160.
3 Morris v. Reyman (Ind. App.), 103 N. E. 423.
See also, Bartholomew v. Emerson-Brantingham Implement Co., - Colo. - , 187 Pac. 538.
4 "In its broader sense the word 'payment' includes money or anything else of value which the creditor accepts in satisfaction of his debt." Roach v. McDonald, 187 Ala. 64, 65 So. 823.
5 "The word 'payment' - which ordinarily conveys the idea of a money transaction - in its restricted sense means 'full satisfaction paid by money, not by exchange or compromise or an accord and satisfaction.'" Roach v. McDonald, 187 Ala. 64, 65 So. 823.
6 Roniger v. Mcintosh, 91 Kan. 368, 137 Pac. 792.
7 "Payment is a mode of extinguishing a debt, and a plea of payment is not an appropriate answer to an unliquidated demand in tort such as was claimed in the complaint. There was no error in sustaining the demurrer to these pleas." Western Ry. v. Foshee, 183 Ala. 182, 62 So. 600.
Payment imports performance and does not apply to the breach of a condition which discharges the contract and makes performance unnecessary.8 Since payment is the discharge of an obligation for the payment of money by the performance thereof, it must be distinguished from assignment, by which the obligation is kept alive, but is transferred by the creditor to another person.9
Since payment is a form of. performance,10 an executory agreement fixing the manner or medium of payment which is not itself performed does not amount to payment,11 unless the parties have expressly agreed to accept such promise as payment, as distinguished from performance.12 The execution and delivery of a renewal note is not payment of usury.13 If an executory contract to make payment by performing personal services is discharged by the death of the creditor before performance, the services which have been actually rendered have been treated as part payment.14