Agreed Payment: When a Payment Agreement Becomes Legally Enforceable

An agreed payment is more than just a number; it is a "liquidated" sum. This means the amount is certain and no longer subject to estimation. Once a payment is "agreed," the focus shifts from how much is owed to when and how it will be delivered. Whether it arises from a commercial invoice or a settlement agreement, it establishes a clear payment obligation.

While many believe a "deal is a deal," the law treats oral and written agreements differently:

• Written Agreements: 
• Provide the forensic evidence needed for quick enforcement. Most states' Statutes of Frauds require certain agreements to be in writing to be enforceable.
• Oral Agreements: 
• Can be legally binding but are notoriously difficult to prove. They often result in "he said, she said" litigation, leading to significant enforcement delays.

For an agreed payment to bind the parties, there must be "mutual assent"—a meeting of the minds. Both parties must clearly understand and agree to the amount, the due date, and any conditions attached to the payment.

In contract law, consideration is the value exchanged. For a payment agreement to be binding, the creditor usually gives something up (like the right to sue) in exchange for the debtor's promise to pay the agreed payment. Without this exchange, the promise may be viewed as a gratuitous gift and could be legally unenforceable.

When parties want to avoid the terminal expense of a trial, they reach a settlement agreement. This document specifies an agreed payment that, once paid, releases the debtor from all future liability related to the dispute.

Not all agreed payments happen at once. Installment payments allow a debtor to satisfy a large obligation over time. However, these agreements must be precisely drafted to include an acceleration clause, which allows the creditor to demand the full balance immediately if a single payment is missed.

A failure to pay an agreed payment is a classic breach of contract. If the agreement was for a "material" sum, the breach allows the creditor to stop their own performance and seek immediate legal intervention. The court does not look at the debtor's intent to pay; it looks at the forensic fact of nonpayment.

If the payment agreement was structured correctly, a default triggers specific penalties. An acceleration clause "accelerates" the debt, making the entire outstanding balance due today rather than months from now. Without this clause, a creditor might be forced to sue for each individual installment as it becomes late.

The primary remedy for a missed agreed payment is the recovery of the unpaid balance plus "pre-judgment interest." In many states, statutory interest rates (often 7–10%) start accruing the moment the due date passes, significantly increasing the debtor's total liability.

A judgment for a missed agreed payment is the first step. SJKP LLP utilizes post-judgment tools to ensure the agreed payment is actually collected:

Bank Levies: Seizing funds directly from the debtor's accounts.

Property Liens: Attaching a claim to the debtor's real estate.

Wage Garnishment: Taking a portion of the debtor's income until the debt is satisfied.

Never rely on a verbal "we'll take care of it." Every agreed payment should be memorialized in a signed writing that specifies:

• The exact dollar amount.
• The precise due date.
• The method of payment (wire, check, etc.).
• The consequences of a default.

If a debtor starts missing "minor" deadlines, it is often a signal of impending nonpayment. Sending a formal demand letter the moment a deadline is missed preserves your rights and prevents the debtor from arguing that you "waived" the payment schedule by being lenient.

Without a written payment agreement, you face massive proof problems. If the debtor claims the agreed payment was actually 50% less than you remember, the court may find the agreement "void for vagueness."

Informal agreements often lack "confession of judgment" or "acceleration" language. This means that instead of a quick court order, you must endure a full-scale civil lawsuit to prove the debt exists before you can even begin the collection process.