The payment of all funds owed to another. An agreement between a creditor and a debtor to discharge the debtor’s debts owed to the creditor for an amount less the debt may constitute payment in full. See Matter of Fineway Supermarkets. Payors of a check may try to insert the language “payment in full” in the back of a check to prove that the payee accepts the payment as complete, but courts may require that the payor had a good faith belief that he owed less than the amount due. See Consolidated Edison Co. of New York, Inc. v. Arroll.
[Last updated in August of 2020 by the Wex Definitions Team]