85. Connecticut, Vermont and mercantile rules optional

The lesson, step by step

1. Warm-up

   Review: Under the United States rule, what happens to a payment smaller than the interest due? (It is held until later payments cover the interest.)

2. Different laws

   Read:

   In Connecticut and Vermont the laws provide the following special rules relative to partial payments:

   Read the first Connecticut rule:

   Compute the interest to the time of the first payment, if that be one year or more from the time that interest commenced; add it to the principal, and deduct the payment from the sum total.

   SayYou don't need to memorize the state rules. Notice that the law decides how the arithmetic is done.

3. The mercantile rule

   Read:

   Business men generally settle notes and accounts payable within a year, by the Mercantile Rule.

   Find the amount of the principal from the date of the note to the date of settlement.

   Find the amount of each payment from its date to the date of settlement.

   From the amount of the principal subtract the sum of the amounts of the payments.

4. Work an example together

   A note for $600 was given June 12, 1865, 6% interest, and the following indorsements were made: Aug. 12, 1865, $100; Nov. 12, 1865, $250; Jan. 12, 1866, $120; what was due Feb. 12, 1866, counting by months instead of days?

   The note grows for 8 months to $624. The payments grow to $103, $253.75 and $120.60, which is $477.35. Due: $146.65.

5. Independent practice

   Your student works the other mercantile example. If interested, try one Connecticut example, following the rule step by step.

6. Check and wrap-up

   Check the printed answers. Ask: Under the mercantile rule, does each payment earn interest for the debtor? (Yes, from the day it is paid.)