IHTM19120 - Legal background - IOUs/bills of exchange/promissory notes

Where an IOU is involved, you should note the effect of the Bills of Exchange Act 1882/S62 and S89. If the holder of a bill of exchange or of a promissory note either unconditionally renounces their rights in writing, or delivers the instrument to the person liable, this discharges the obligations of the acceptor or promissor, even though no consideration is received. So this is an exception to the rule that a unilateral discharge of a debt requires some form of consideration.

In the light of the above, an IOU for £18,000 endorsed on the back '£6,000 repaid by way of gift' and signed by the deceased was agreed to be sufficient to release the £6,000 - see Edwards v Walters [1896] 2Ch pages 166 to 168.