Frequently Asked Questions

How do laws governing accord and satisfaction contracts vary from state to state?

The laws governing accord and satisfaction contracts can indeed vary significantly from state to state. Accord and satisfaction agreements are often used as a defense in breach of contract lawsuits, particularly when one party claims they have been given less than what they believe they are owed. The Uniform Commercial Code (UCC) outlines specific conditions for the satisfaction of an accord and satisfaction agreement, including the good faith provision of something to the creditor as full satisfaction of the debt, and the receipt of payment by the creditor. However, the settlement may not be valid under certain circumstances, such as if the debtor can prove that they were informed that any payment sent as full satisfaction should be sent to a designated person, office, or place, and the payment was not sent to that designated location. In order to use the accord and satisfaction defense in court, an entity must generally prove that there is an agreement between the parties, a dispute between the parties, evidence that the parties intentionally agreed to resolve an existing obligation with a lesser payment, and that payment has been accepted. The creditor must also communicate to the debtor that acceptance of the lesser amount indicates satisfaction with the previous agreement.