Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Find a Job
  • Tutoring
  • Home
  • Law, Transactions, & Risk Management
  • Commercial Law: Contract, Payments, Security Interests, & Bankruptcy

Negotiable Instrument - Accord and Satisfaction

What is an Accord and Satisfaction of a Negotiable Instrument?

Written by Jason Gordon

Updated at September 26th, 2021

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What is an accord and satisfaction?What is Required for an Accord and Satisfaction?Discussion QuestionPractice QuestionAcademic Research

What is an accord and satisfaction?

An accord and satisfaction is a resolution of a contested debt. For example, the payor and holder of a negotiable instrument may have a dispute as to the amount and duty of payment of the instrument. Often a payor of the debt will offer a lesser amount than what is claimed by the holder in full satisfaction of the debt owed. This is an offer of settlement of the disputed debt. 

Next Article: Negotiable Instrument - Liability for Warranties Back to: COMMERCIAL PAPER

What is Required for an Accord and Satisfaction?

An instrument that purports to be full payment for an obligation will discharge an obligation if certain requirements are present:

  • Good Faith - One party, in good faith, tenders an instrument to the claimant as full satisfaction of the claim;
  • Bona Fide Dispute - The amount of the claim is subject to a bona fide dispute;
  • Payment Accepted - The party receiving the offer of settlement obtains payment of the instrument; and
  • Adequate Notice - The instrument or accompanying written communication contains a conspicuous statement to the effect that the instrument is tendered as full satisfaction of the claim.

A creditor receiving an offer of accord and satisfaction who inadvertently accepts the payment (not aware of accord language), upon learning of the other party's intent, may make or offer repayment within 90 days of receipt.

Related Topics

  • Guaranty or Guarantee
  • What is the role of a Guarantor or Surety of a negotiable instrument?
  • What is an Accord & Satisfaction?
  • What is primary and secondary liability on an instrument?
  • What is Drawer or Maker Liability for a negotiable instrument?
  • What is Transferor Warranty of a negotiable instrument?
  • What is Indorser Warranty of a negotiable instrument?
  • What is Presentment Warranty of a negotiable instrument?
  • What is a warrantors liability for a dishonored note or draft?
  • What is the time limitation for warranty of a negotiable instrument?
  • When are the warranties of a negotiable instrument discharged?

Discussion Question

Why do you think the UCC allows for the accord and satisfaction of a disputed payment obligation under a negotiable instrument? Are the prerequisites for a valid accord and satisfaction adequate? Why or why not? Can you think of any other necessary requirements?

Practice Question

Cathy enters into a contract with Bernice. A dispute arises as to each party's performance of the agreement. Cathy sends a check to Bernice with accord and satisfaction printed on the check. What is else is required to effect a valid accord and satisfaction of the disputed debt?

Academic Research


negotiable instrument accord and satisfaction

Was this article helpful?

Yes
No

Related Articles

  • Protections of a Buyer in the Ordinary Course of Business - Explained
  • Priority of Multiple Purchase Money Security Interest - Explained
  • Contract Performance, Breach, and Damages
  • Doctrine of Utmost Good Faith - Explained



©2011-2023. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand