Also known as: datio in soluto · dation in payment · substitute performance
Written by attorneys · grounded in primary & secondary sources — see below
A method of discharging an obligation by the obligor's tender and the obligee's acceptance of a performance different from that originally due.
Select any source to read its text and confirm it supports the definition.
Blue Real Estate agreed to convert a specific historic warehouse into lofts for Phoebe. After the warehouse was destroyed, Blue Real Estate offered to build new units on the same land using comparable materials. Phoebe accepted the new construction as full satisfaction of the original obligation.
Pine Assurance issued a policy covering a specific historic aircraft owned by Brook Coverage. After the plane was destroyed, Brook Coverage located a comparable replacement and Pine Assurance accepted coverage of the substitute aircraft as discharging its original inspection and indemnity duties.
The City of Newark hired Harrison to create a sculpture for a plaza. After Harrison repudiated, the City located a replacement artist. Harrison later offered substitute performance, but the City accepted the replacement artist's work as discharging Harrison's original duty.
Transatlantic Financing agreed to carry goods for the United States by a direct route. When the customary route became unavailable, the parties accepted an alternate commercially reasonable route as full performance discharging the original delivery obligation.
Datio in solutum discharges the original obligation upon acceptance of the substitute performance. Accord and satisfaction requires a new agreement plus execution of that agreement to discharge the prior duty.
Supporting sources
The definition requires only the obligee's consent to accept something other than the thing originally due. Equality of value is not a stated element.
Supporting sources
The definition focuses on discharge by giving and acceptance of substitute performance. It can be used to resolve an existing breach when the parties agree to the substitution.
Supporting sources
…agreed manner of delivery becomes commercially impracticable but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted.” (Emphasis added.) Compare Mr. Justice Holmes’ observation: “You can give any conclusion a logical form. You always can imply a condition in a contract. But…