Accord and satisfaction is the purchase of the release from a debt obligation. The payment is typically less than what is owed and is not paid by the actual performance of the original obligation. The accord is the agreement to discharge the obligation and the satisfaction is the legal "consideration" which binds the parties to the agreement. (Note, Consideration under English law is dealt with separately) Consideration is a central concept in the common law of contracts. ...
If a person is sued over an alleged debt they bear the burden of proving the affirmative defense of accord and satisfaction Affirmative defense. An affirmative defense is a defense used in litigation between private parties in common law jurisdictions. ...
See also
Foakes v. Beer - an old leading case on the exception of accord and satisfaction
Petitioner contends that the Secretary's negotiation of this check served as an accord and satisfaction of her obligation on this debt.
Accord and satisfaction is, in fact, a contract which must reflect the essential elements of the meeting of the minds of the parties and the giving and receiving of something of value as consideration therefor, contemplated as something less than the amount claimed by a creditor.
If there is not an actual dispute between the parties, there cannot be an accord and satisfaction because if there is no dispute, the accord would not be supported by consideration since the creditor would not be giving anything up in exchange for the payment from the debtor.
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 accord and satisfaction is a contract, and all the essential elements of a contract must be present.
It is used only for disputes between a debtor and a certain number of his or her creditors, while an accord and satisfaction can be used to settle any kind of controversy—whether arising from contract or tort—and ordinarily involves only two parties.
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