Accord and Satisfaction

• Author: Jeffrey Lehman, Shirelle Phelps

Page 57

A method of discharging a claim whereby the parties agree to give and accept something in settlement of the claim and perform the agreement, the accord being the agreement and the satisfaction its execution or performance, and it is a new contract substituted for an old contract which is thereby discharged, or for an obligation or CAUSE OF ACTION which is settled, and must have all of the elements of a valid contract.

To constitute an ACCORD AND SATISFACTION, there must have been a genuine dispute that is settled by a meeting of the minds with an intent to compromise. Where there is an actual controversy, an accord and satisfaction may be used to settle it. The controversy may be founded on contract or TORT. It can arise from a collision of motor vehicles, a failure to deliver oranges ordered and paid for, or a refusal to finish constructing an office building, etc.

In former times, courts recognized an accord and satisfaction only when the amount of the controversy was not in dispute. Otherwise, the resolution had to be by COMPROMISE AND SETTLEMENT. The technical distinction is no longer made, however, and a compromise of amount can properly be part of an accord and satisfaction. The amount, whether disputed or not, is usually monetary, as when a pedestrian claims $10,000 in damages from the driver who struck him. The amount can be a variety of other things, however, as when a homeowner claims that she ordered a swimming pool thirty-six feet long rather than thirty-five feet or when an employee insists that he is entitled to eleven rather than ten days of vacation during the rest of the calendar year.

An accord and satisfaction can be made only by persons who have the legal capacity to enter into a contract. A settlement is not binding on an insane person, for example; and an infant may have the right to disaffirm the contract. Therefore, a person, such as a guardian, acting on behalf of a person incapable of contracting for himself or herself may make an accord and satisfaction for the person committed to his or her charge, but the law may require that the guardian's actions be supervised by a court. An executor or administrator may bind an estate; a trustee can accept an accord and satisfaction for a trust; and an officer can negotiate a settlement for a corporation.

A third person may give something in satisfaction of a party's debt. In such a case, an accord and satisfaction is effected if the creditor...