The Court of Appeal ruled that a Creditor who compromised a claim against one of two joint debtors released the other debtor from liability altogether! In the case (Morris v Wentworth-Stanley TLR 2/10/98) one debtor made a payment to the Creditor ‘in full and final settlement’.

Unwittingly, the Creditor accepted this payment and thereby, according to the Court of Appeal, waived any claim against the other debtor. Creditors must therefore be careful when dealing with debts owed by partnerships. 

We suggest you take legal advice before negotiating settlement with one partner if you want to reserve your rights against the other partners.

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