Accord and Satisfaction

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Accord and Satisfaction

Accord and satisfaction is an agreement between two parties who already have contractual duties towards each other to settle a contract dispute by accepting less than what is actually due under the contract. Accord and satisfaction procedure is often used by creditors who want to cut their losses by collecting as much money as they can from debtors who are unable pay the full amount.

See also Milgard Tempering, Inc. v. Selas Corporation of America, 902 F.2d 703 (1990)

"An accord and satisfaction consists of three elements: (1) a bona fide dispute; (2) an agreement to settle that dispute (accord); and (3) execution of that agreement (satisfaction). The agreement is interpreted according to ordinary contract principles. The key element of accord and satisfaction is the intention of the parties, which as a rule presents a question of fact. The trie of fact must determine whether there was a meeting of minds as to the subject matter of the new agreement and an intention to reach a genuine compromise."