Smith and Roberson's Business Law 16th Edition by Richard Mann,Barry Roberts

Exercise 4

Green owed White $3,500, which was due and payable on June 1. White owed Brown $3,500, which was due and payable on August 1. On May 25, White received a letter signed by Green stating, "If you will cancel my debt to you, in the amount of $3,500, I will pay, on the due date, the debt you owe Brown, in the amount of $3,500." On May 28, Green received a letter signed by White stating, "I received your letter and agree to the proposals recited therein. You may onsider your debt to me canceled as of the date of this letter." On June 1, White, needing money to pay his income taxes, made a demand upon Green to pay him the $3,500 due on that date. Is Green obligated to pay the money demanded by White?