Your client, Kevin Adams, borrowed $100,000 from Ethan Sanders on March 1, 2014 and used the money to expand his business. Mr. Adams signed a Promissory Note in which he agreed to repay the loan on September 1, 2015.
Mr. Sanders has had some recent financial difficulties, is in need of cash, and telephoned Mr. Adams and made the following offer. Mr. Sanders promised that if Mr. Adams pays him $50,000 by April 1, 2015, Mr. Sanders would accept the $50,000 as full satisfaction of Mr. Adams' obligation to pay $100,000.
Mr. Adams is very interested in the proposal. Although he will have to struggle a bit to pay the money back now, it would be worth it to him if he can be certain that he would be able to save $50,000 by paying $50,000 by April 1, 2015. Mr. Adams wanted Mr. Sanders to put his promise in writing, but when he suggested it, Mr. Sanders said that his word was good and was offended that Mr. Sanders would suggest that he could not be trusted.
Mr. Adams has asked for your advice as to whether he should accept Mr. Sander's offer. Please prepare a memo to Mr. Adams advising him on this matter. Your memo should specifically deal with and explain the issues of: (1) whether Mr. Sander's promise will be binding and enforceable and (2) whether the fact that his promise will not be in writing will be a problem.