Tom borrows $1000 from Sam, it is agreed he will repay all the money on May 10th. On May 9th, Tom tells Sam that he cannot pay all the money but that he thinks he could raise $700 by the next day. He asks Sam whether he would accept $700 in full settlement of the whole debt.

Sam agrees to accept the $700 in full settlement of the debt. On the basis of Sam's promise, Tom manages to round up the $700 and pays it to Sam on 10 May.

The following week Sam sees Tom and demands the $300 balance of the loan.

a) Using IRAC, Advise Tom whether he is legally obliged to pay Sam the remaining $300.

(b) Would your advice in (a) be different if Tom had offered Sam $700 plus a box of chocolates, which

Sam happily accepted?