Frequently Asked Questions

Can you provide an example of a lawsuit arising from a disagreement between a creditor and debtor about accord and satisfaction?

A classic example of a lawsuit arising from a disagreement between a creditor and debtor about accord and satisfaction is the H.L. “Brownie” Choate, Inc. V. Southland Drilling Co., Inc case in San Antonio. This case reached the Texas Supreme Court and provides a clear illustration of the complexities involved in accord and satisfaction agreements. In this case, Southland Drilling Co., Inc damaged a drilling rig owned by H.L. “Brownie” Choate, Inc. In response, Choate attempted to settle the dispute by deducting an amount equal to the value of the damaged rig from the amount it owed to Southland Drilling. This was a common practice in such situations. However, Southland Drilling later sent Choate a check for a lesser amount than the total owed, with a notification stating that the payment was made in full. Choate disagreed with this settlement and sued to recover the remaining amount. The court, however, ruled that by accepting and cashing the check offered in “full settlement,” Choate had effectively agreed to an accord and satisfaction of the debt. This case highlights the importance of understanding the implications of accord and satisfaction agreements and the potential legal consequences of accepting a payment offered as a full settlement.