Answer to Question #230279 in Management for Aishu

Question

Please explain Clayton’s Rule of Appropriation by pointing out the relevant provisions

of law.

Answer 1

Clayton Rule

Case name: Devaynes vs. Noble of 1816

The rule which relates to assets distribution in money form from accounts held in banks.

As per the judgement in the case it was basically concluded that regardless of the period when debt is paid in agreed form. Therefore, the rule implies that whenever a debtor pays his/her debt, fund appropriation can be done to any of the debt he admires with adequate agreement by the creditors.    

Provisions appropriate in the Clayton rule

Payment and receipt Appropriation. Appropriation occurs in order in which receipts and an actual payment occurs. Items on the debit and credit sides ought to be appropriated accordingly.

 

section 61, if the debtor does not intimate and the creditor fails to do appropriation, the payment shall be applied in discharge of debt.

section 59

(i) Payment Appropriation is a primary right of a debtor and for his advantage.

(ii) Incase the debtor has no express intimation, the Law subsequently looks at the surrounding circumstances for payment appropriation.

Section 60

(i) In this case the creditor can apply one’s own discretion to any lawful debt due and payable to the latter  from the debtor.

(ii) The creditor until when he has declared actual appropriation to debtor can alter the appropriation.

Part-payment

Under this the applicable principle is that payment ought to be first be applied to the interest and subsequently fully paid wholesomely.