FACTS: The Bellagio sends a letter to Lady Gaga demanding that he repay the $1,000,000 advance payment. Lady Gaga instructs his lawyer to write a letter to the Bellagio which states:
Lady Gaga does not agree with your demand that she repay the $1,000,000 advance cash payment, but to demonstrate Ms. Gaga’s good faith, she has agreed to return one-half of the advance cash payment in the amount of $500,000. Enclosed is Ms. Gaga’s check for $500,000 which will be settlement in full of all claims of the Bellagio against Ms. Gaga.
The Bellagio then deposits the check for $500,000.
1. Does the Bellagio’s deposit of the check end the dispute and resolve the Bellagio’s claims in full? Explain your answer. What is the term used to describe the parties’ substitution of a different performance to complete a contract?
2. Does it make any difference if before the Bellagio deposits Lady Gaga’s check for $500,000, the lawyer for the Bellagio sends a letter to Lady Gaga and her lawyer which states, in part: