Contracts Act · s 60

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s 60Application of payment where debt to be discharged is indicated

Where a debtor, owning several distinct debts to one person makes a payment to him either with express intimation or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly.

Illustrations

(a)

A owes B among other debts, $1,000 upon a promissory note, which falls due on 1st June. He owes B no other debt of that amount. On 1st June, A pays to B $1,000. The payment is to be applied to the discharge of the promissory note.

Contracts

(b)

A owes to B among other debts, the sum of $567. B writes to A and demands the payment of this sum. A send to B $567. This payment is to be applied to the discharge of the debt of which B had demanded payment.