Accord And Satisfaction

ASK THE LAWYER: Is 'Payment in Full' on check legally binding once check is ...

Q: Can we end a dispute over what is owed by sending a check with the clear notation on it "Payment in Full"? Then if they negotiate the check we're done, right? - J.R., Rolling Hills Estates

A: This brings into play a legal doctrine known as "accord and satisfaction." It arises when there is a dispute over what is owed. An offer is made to resolve the dispute, and the offer is accepted. The agreed-upon consideration is then given; that ends the conflict, and constitutes an accord and satisfaction. A problem in California is we have seemingly conflicting statutes. Civil Code Section 1526 indicates the creditor can just strike through the "payment in full" language to make the payment ineffective as an accord and satisfaction, even if the check is negotiated. Commercial Code Section 3311, however, states the "payment in full" notation is binding, even if the words are crossed out by the creditor. The more recent of the two statutes is Commercial Code Section 3311, so the creditor's safer step is to return the check, or refuse to negotiate it. For your part, you can increase the likelihood of being able to successfully argue accord and satisfaction if no less than 15 days and no more than 90 days before sending the check (with the restrictive language on it), you notify the creditor in writing that you are going to do just that . Sending such a letter certified mail/return receipt requested should be seriously considered.

Q: We were owed money by a customer, who sent us part of it. On the check she wrote "payment in full." We did not notice the words, and cashed it. When we demanded the rest of the money she insisted we were stuck with what she sent, since we deposited it. Is there any way around this? - K.W., Long Beach

A: If you negotiated the check in error, you have 90 days under Commercial Code Section 3311 to discover your mistake and return the monies to the other party. If this is done, per Section 3311(c)(2), the monies remain owing, and the attempted accord and satisfaction is unsuccessful. Unfortunately, I cannot guaranty your returning the funds will work. There is a California Court of Appeal decision which holds whether an accord and satisfaction has occurred is a question of fact.

This typically means there has to be a hearing or trial to determine whether or not an accord and satisfaction has occurred.

WHAT IS AN ACCORD AND SATISFACTION? - Reiff Law Office

An accord and satisfaction is a legal doctrine that states that once a bill has been paid in full, the creditor cannot recover from the debtor again. Obviously, this doctrine makes sense. However, the nuances can lead to some difficult analysis.

This doctrine is most often raised when the debtor submit a payment for less than the amount owed but with a marking that it is payment in full. For any creditor, this raises a thorny problem of whether to accept the payment and continue collection efforts, accept the payment and not seek additional funds, or to reject the payment.

The law provides that in many cases, accepting payment marked as payment in full, even if more money is still owed, is an accord and satisfaction. The doctrine is decidedly more nuanced than that, and such a payment is not an accord and satisfaction in all cases. Nonetheless, a creditor should exercise great caution when receiving a check denoted as payment in full.

Accord and satisfaction

Accord and Satisfaction

Trial evidence, The rules of evidence applicable on the trial of civil actions, including both causes of action and defenses at common law, in equity and under the codes of procedure

An abridgment of the law of nisi prius

The code of the state of Georgia