1. An agreement between a debtor and two or more creditors for the adjustment or discharge of an obligation for some lesser amount; an agreement among the debtor and two or more creditors that the debtor will pay the creditors less than their full claims in full satisfaction of their claims. • The preexisting-duty rule is not a defense to this type of agreement because consideration arises from the agreement by each creditor with each other to take less than full payment. Through the performance of this agreement, the debtor is discharged in full for the debts of the participating creditors.
— Also termed composition with creditors; creditors’ composition; at-termoiement. [Cases: Bankruptcy 3662.100–3662.115; Debtor and Creditor 10. C.J.S. Assignments for Benefit of Creditors § 26; Creditor and Debtor§§ 84–94.]
2. The compensation paid as part of such an agreement.
3. Hist. A payment of money or chattels as satisfaction for an injury. • In Anglo-Saxon and other early societies, a composition with the injured party was recognized as a way to deter acts of revenge by the injured party. — compose, vb.
“[T]he first theory of liability was in terms of a duty to buy off the vengeance of him to whom an injury had been done whether by oneself or by something in one’s power. The idea is put strikingly in the Anglo-Saxon proverb, ‘Buy spear from side or bear it,’ that is, buy off the feud or fight it out…. As the social interest in peace and order — the general security in its lowest terms — comes to be secured more effectively by regulation and ultimate putting down of feud as a remedy, payment of composition becomes a duty rather than a privilege …. The next step is to measure the composition not in terms of the vengeance to be bought off but in terms of the injury. A final step is to put it in terms of reparation.” Roscoe Pound, An Introduction to the Philosophy of Law 74 (rev. ed. 1954).
