Marty had a contract to paint Peter's fence for $2,000. Marty painted the fence and Peter did not pay Marty (under the contract he was to make payment 7 days after completion of the job). Peter was happy with the paint job; he didn't pay Marty because Peter had lost his job and did not get a paycheck that month. Six months later, Marty needed money badly. Marty told Peter that if Peter would give him $1,100 immediately, Marty would release him from the other $900 owed. Peter agreed and gave Marty a check for $1,100. On the check, Peter wrote "payment in full." Marty cashed the check. Two months after cashing the check, Marty demanded the other $900 from Peter and filed a lawsuit.

Based on the situation above, explain in detail who should win and why?