If A borrows from B, A now owes B
Then C shows up and pays B with the agreement that it settled A’s debt to B.
A does not know any agreement was made but the original A owes B
A goes to pay B.
B says A doesnt owe B.
C says A owes C
But A did not make an agreement that he owed C.
How does A owe C now?
It seems to me that: C gave A the gift of settling A’s debt to B.
In: Economics
It’s not quite like that. C doesn’t “settle” As debt.
Imagine you’re lending money to your friend, John. John takes $5 from you and hands you a note. “I owe you $5 plus interest” but doesn’t say your name. You have a lot of space on the page to change the amount John owes you, to keep track of how much is left.
It’s been a year John is paying back the $5, but only a dime per month. You realize it’s going to take FOREVER for John to pay you back. Based on interest he owes you an extra $0.20 You could try and hurry him along, but your friend Anthony offers you $4 for the IOU note. You hand him the note and he hands you $4.50
Now you’ve gotten paid $1.20, plus the $4 that Anthony paid you. Nice profit! You’ve been keeping track of how much is left on the note and now Anthony sees there is, $4 left. At the end of paying off the note he’ll make some more money from interest.
All that changes for John is who he sends the check too. He still owes that money. And if he doesn’t pay it Anthony can go try and get it back.
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