A method of discharging a claim whereby the parties agree to give and accept something in settlement of the claim and

perform the agreement, the accord being the agreement and the satisfaction its execution or performance, and it is a new contract substituted for an old contract which is thereby discharged, or for an obligation or Cause of Action which is settled, and must have all of the elements of a valid contract. To constitute an Accord and Satisfaction, there must have been a genuine dispute that is settled by a meeting of the minds with an intent to compromise. Where there is an actual controversy, an accord and satisfaction may be used to settle it. The controversy may be founded on contract or TORT. It can arise from a collision of motor vehicles, a failure to deliver oranges ordered and paid for, or a refusal to finish constructing an office building, etc. In former times, courts recognized an accord and satisfaction only when the amount of the controversy was not in dispute. Otherwise, the resolution had to be by Compromise and Settlement. The technical distinction is no longer made, however, and a compromise of amount can properly be part of an accord and satisfaction. The amount, whether disputed or not, is usually monetary, as when a pedestrian claims $10,000 in damages from the driver who struck him. The amount can be a variety of other things, however, as when a homeowner claims that she ordered a swimming pool thirty-six feet long rather than thirty-five feet or when an employee insists that he is entitled to eleven rather than ten days of vacation during the rest of the calendar year. An accord and satisfaction can be made only by persons who have the legal capacity to enter into a contract. A settlement is not binding on an insane person, for example; and an infant may have the right to disaffirm the contract. 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 executor or administrator may bind an estate; a trustee can accept an accord and satisfaction for a trust; and an officer can negotiate a settlement for a corporation. A third person may give something in satisfaction of a party's debt. In such a case, an accord and satisfaction is effected if the creditor accepts the offer and the debtor authorizes, participates in, or later agrees to, the transaction. For example, a widower has an automobile accident but is mentally unable to cope with a lawsuit because his wife has just died. He gratefully accepts the offer of a close family friend to talk to the other driver, who has been threatening a lawsuit. The friend convinces the other driver that both drivers are at fault to some extent. The friend offers to pay the other driver $500 in damages in exchange for a written statement that she will not make any claim against the widower for damages resulting from the accident. The family friend and the other driver each sign a copy of the statement for the other, and when the payment is made, the accord and satisfaction is complete. If the other driver then sues the widower for more money on account of the accident, the widower could show that he agreed to let his friend negotiate an accord and satisfaction, and the court would deny relief.

An accord and satisfaction is a contract, and all the essential elements of a contract must be present. The agreement must include a definite offer of settlement and an unconditional acceptance of the offer according to its terms. It must be final and definite, closing the matter it covers and leaving nothing unsettled or open to question. The agreement may call for full payment or some compromise and it need not be based on an earlier agreement of the parties. It does not necessarily have to be in writing unless it comes within the statute of frauds. Unless there are matters intentionally left outside the accord and satisfaction, it settles the entire controversy between the parties. It extinguishes all the obligations arising out of the underlying contract or tort. Where only one of two or more parties on one side settles, this ordinarily operates to discharge all of them. The reason for this is the rule that there should be only one satisfaction for a single injury or wrong. This rule does not apply where the satisfaction is neither given nor accepted with the intention that it settle the entire matter. An accord without satisfaction generally means nothing. With a full satisfaction, the accord can be used to defeat any further claims by either party unless it was reached by Fraud, duress, or mutual mistake. An accord and satisfaction can be distinguished from other forms of resolving legal disputes. A payment or performance means that the original obligations were met. A release is a formal relinquishment of the right to enforce the original obligations and not necessarily a compromise, as in accord and satisfaction. An Arbitration is a settlement of the dispute by some outside person whose determination of an award is voluntarily accepted by the parties. A Composition with Creditors is very much like an accord but has elements not required for an accord and satisfaction. 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 tortand ordinarily involves only two parties. Although distinctions have occasionally been drawn between an accord and satisfaction and a compromise and settlement, the two terms are often used interchangeably. A novation is a kind of accord in which the promise alone, rather than full performance, is satisfaction, and is accepted as a binding resolution of the dispute.

Further readings
Dolson, Andrew J. 1995. "Accord and Satisfaction under Article 3A of the UCC: A Trap for the Unwary." Virginia Bar Association Journal 21 (winter): 912. Floyd, Michael D. 1994. "How Much Satisfaction Should You Expect from an Accord? The U.C.C. Section 3-311 Approach." Loyola University of Chicago Law Journal 26 (fall): 127. Veltri, Stephen C., et al. 2000. "Payments." Business Lawyer 55 (August): 1981. West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

accord and satisfaction n. an agreement to accept less than is legally due in order to wrap up the matters. Once the accord and satisfaction is made and the amount paid (even though it is less than owed) the debt is wiped out since the new agreement (accord) and payment (the satisfaction) replaces the original obligation. It is often used by creditors as "bird in the hand is worth two in the bush" practicality. (See: novation)

Date: 01-07-2010 Case Style: Margaret Mossing v. Demlow Products, Inc. Case Number: 287643 Judge: Per Curiam Court: Michigan Court of Appeals on appeal from the Lenawee Circuit Court Plaintiff's Attorney: Defendant's Attorney: Description: Although the primary issue raised in this appeal is a rather straight-forward application of the principle of accord and satisfaction, the cross appeal raises an interesting jurisdictional question regarding whether a challenge to a post-judgment order denying attorney fees may be raised as part of a cross appeal from the original judgment itself. We hold that where the cross appeal from the original judgment was filed in this Court before the trial court has entered the order denying an award of attorney fees and costs, a separate appeal must be taken from the postjudgment order denying fees and costs. Plaintiff is an independent manufacturer representative for suppliers of automobile parts. Defendant Demlow Products is a manufacturer of wire forms that are used to build seats for automobiles. Plaintiff and defendants entered into a business relationship in 1991 and continued until June 2006. On June 21, 2006, defendants sent plaintiff a correspondence informing plaintiff that they were terminating their contract and stated that plaintiff would receive her commissions through June 30, 2006. Included with the correspondence was a check for $7364.94, and on the comment line was written, JUNE 2006 FINAL PMT. Plaintiffs attorney responded and explained that plaintiff would be cashing the check for $7364.94 with the understanding that the future commissions were still in dispute, and therefore the check would not be considered as a final payment. When further payments were not forthcoming, plaintiff filed the instant action alleging breach of contract, conversion and a violation of MCL 600.2961. Defendants filed a counterclaim, as well as raised various affirmative defenses, including accord and satisfaction.

Ultimately, the trial court concluded that there was no genuine issue of material fact on the issue of accord and satisfaction and that this issue disposed of all of the claims and counterclaims. The trial court, however, separately considered the issue of defendants request for an award of attorney fees and costs. Plaintiff filed a claim of appeal, and defendants filed a claim of cross appeal, from the order granting summary disposition. Thereafter, the trial court entered its postjudgment order denying defendants request for attorney fees and costs. Although this is considered a final order under MCR 7.202(6)(iv) and may be appealed by right, defendants did not file a separate appeal and merely raised their challenge to the denial of fees and costs as part of their cross appeal. We turn first to plaintiffs argument on appeal that there has been no accord and satisfaction of her claims because the notation on the check sent to plaintiff was insufficient to put her on notice that defendants intended a discharge of any and all claims. We disagree. The trial court granted defendants motion for summary disposition as to plaintiffs complaint based on MCR 2.116(C)(10), no genuine issue as to any material fact. This Court reviews the granting of such a motion under a de novo standard.1 In considering a motion pursuant to MCR 2.116(C)(10), a court considers affidavits, pleadings, depositions, admissions and other evidence submitted by the parties in a light most favorable to the nonmoving party.2 Where proffered evidence fails to establish a genuine issue of material fact, the moving party is entitled to judgment as a matter of law.3 A litigants mere pledge to establish at trial that a genuine issue of material fact exists is not sufficient to overcome summary disposition.4 MCL 440.3311, not the common law, applies to an accord and satisfaction involving a negotiable instrument such as a check.5 MCL 440.3311(4) states: A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim. Not only did defendants send a check containing the words JUNE 2006 FINAL PMT. on the memo line, but it also was sent with a correspondence containing defendants intention to terminate the contract. Upon receiving this check and correspondence, plaintiffs attorney sent a responding correspondence stating: My client . . . received a check of $7364.94, representing a payment for June. The memo on the check also indicated that it was a final payment. As you know, the issue of future payment is in dispute in this matter and therefore, the check is being cashed with the understanding that it is not, in fact, a final payment . . . . Plaintiff fully understood that the check was tendered for final payment. Not only did plaintiff acknowledge it was for final payment in this correspondence, she cashed the check knowing that the check was intended to be for final payment. This was proper accord and satisfaction

according to MCL 600.3311(4), and the trial court did not err in granting summary judgment on this issue. Our resolution of the accord and satisfaction issue renders plaintiffs second issue on appeal and defendants first and second issue on cross appeal moot. But defendants also argue on their cross appeal a third and final issue concerning attorneys costs and fees, which is not resolved by the accord and satisfaction issue. Defendants argue that the trial court erred in denying attorneys costs and fees to defendants. Plaintiff responds that this Court lacks jurisdiction to consider this issue because defendants did not claim an appeal from the order denying fees and costs. We agree. A post-judgment order awarding or denying attorneys fees and costs is a final order under MCR 7.202(6)(iv) that may be appealed by right. But it is less than clear that such an order must be separately appealed, or whether an issue involving the awarding or denying of fees and costs that is covered in a post-judgment order may be raised as part of the appeal, or in this case, cross appeal, from the actual final judgment itself. Plaintiff does not refer us to any controlling precedent on this issue, nor were we able to find any. The closest case on point, Costa v Community Emergency Medical Services, Inc,6 is not directly relevant. In Costa, the defendants appealed by right from an order denying their motion for summary disposition based upon governmental immunity. MCR 7.202(6)(v) provides that an order denying summary disposition based upon governmental immunity is a final order and therefore immediately appealable by right. The plaintiffs claimed a cross appeal, challenging the circuit courts denial of their motion for summary disposition based upon an argument that two of the defendants had failed to file an affidavit of meritorious defense as required by statute. Those defendants argued that this Court lacked jurisdiction to consider the cross appeal because it went outside the limited scope of the appeal itself. This Court disagreed. This Court acknowledged that the scope of an appeal of right under MCR 7.202(6)(v) is limited to issues related to the denial of summary disposition based upon governmental immunity.7 But, this Court went on to conclude that a cross appeal is not so limited. Citing MCR 7.207(A)(1), the Costa Court concluded that there is a general right to claim a cross appeal and that the court rules do not limit the scope of that cross appeal.8 Indeed, the Court9 noted that MCR 7.207 does not restrict a cross-appellant from challenging whatever legal rulings or other perceived improprieties during the trial court proceedings. The Court went on to note that, even if the initial appeal is abandoned, the cross appeal continues. But Costa is hardly controlling on the issue before us. Not only does it deal with a different subrule of MCR 7.202(6), it also involved an order (denial of summary disposition) that is inherently interlocutory other than the fact that the court rule defines it as being a final order, while our case involves a post-judgment order. This leads to another difference in that the case at bar involves an order denying fees and costs that had not even been entered in the trial court until after the claims of appeal and cross appeal were filed in this case. That is, defendants challenge on their cross appeal an order that did not even exist at the time they claimed the cross appeal. Although the time line in Costa is unclear, presumably the order challenged in the cross appeal had been entered (or certainly could have been entered) before the appeal and cross appeal were

claimed. The broad language in Costa might support the proposition that a post-judgment order denying fees and costs can be challenged as part of the appeal from the final judgment itself because it is part of whatever legal rulings or other perceived improprieties occurred during the trial court proceedings.10 But we conclude that it would be reading Costa and the court rules too broadly to conclude that a claim of cross appeal invokes this Courts jurisdiction to challenge an order entered in the trial court after the claim of cross appeal was filed with this Court. Because we need not decide in this case whether a post-judgment order granting or denying an award of attorney fees and costs that is entered before a claim of cross appeal is filed in this Court must nevertheless be separately appealed, we decline to do so. Rather, we only hold in this case that a separate appeal from such a post-judgment order must be filed when that order is entered in the trial court after the claim of cross appeal is filed in this Court. We recognize that failing to address the merits of this issue does a certain injustice in this case because defendants would very likely prevail on the merits given the mandatory, rather than discretionary, nature of the award of attorney fees and costs under MCL 600.2961(6) and that the trial court most likely erred in denying an award as to the claim raised under that statute. *** See: http://coa.courts.mi.gov/documents/OPINIONS/FINAL/COA/20100107_C287643_50_287643. OPN.PDF Outcome: Nonetheless, we believe that we have no choice but to conclude that this Courts jurisdiction has not been properly invoked to allow us to review that order. Defendants had to have filed a claim of appeal from the order denying the award of fees and costs or, having failed to do that in a timely manner, filed an application for leave to appeal from that order. Affirmed. No costs, neither party having prevailed in full.

Description
This section is from the book "Handbook Of The Law Of Contracts", by Wm. L. Clark, Jr.. Also available from Amazon: Handbook of the law of contracts.

Accord And Satisfaction

An accord and satisfaction is an agreement, which need not be under seal, the effect of which is to discharge the right of action possessed by one of the parties against the other. In order to have this effect, there must be a consideration for the promise of the party entitled to sue. It is further necessary that the accord shall be executed; otherwise the agreement is an accord without a satisfaction.64 The promisor must have obtained what he bargained for in lieu of his right of action, and he must have obtained something more than a mere fresh arrangement as to the payment or discharge of the existing liability.65 It is not meant by this that a promise can never be received as a satisfaction. If the promise and not its performance is accepted in satisfaction, it is a good accord and satisfaction without performance. In other words, a new contract agreed upon, and accepted, as a satisfaction, operates as an accord and satisfaction.66 The satisfaction may consist in the acquisition of a new right against the debtor, as the receipt from him of a negotiable instrument in lieu of payment;67 or of new rights against the debtor and third persons, as in the case of a composition with creditors;68 or of something different in kind from that which the debtor was bound by the original contract to perform;69 but it must have been taken by the creditor as satisfaction for his claim in order to operate as a valid discharge. There can be no satisfaction without accord or agreement to that effect.70 Md. G7, 42 Am. Rep. 322; Kidder v. Kidder, 33 Pa. 268. See "Release," Dec. Dig. (Key-No.) 1; Cent. Dig. 5-11. 62 34 Cyc. 1045, 1046, 104S, et seq. 63 See Pacific Mutual Ins. Co. v. Webb, 157 Fed. 155. 84 C. C. A. 603, 13 Ann. Cas. 752. See "Release," Dec. Dig. (Key-No.) 16-20; Cent. Dig. 31-38. 64 Bayley v. Homan, 3 Bing. (N. C.) 915: Lynn v. Bruce, 2 H. Bl. 317; Kro-mer v. Heim, 75 N. T. 574, 31 Am. Eep. 491; Hosier v. Hursh, 151 Pa. 415, 25 Atl. 52; Costello v. Cady, 102 Mass. 140; Petty v. Allen, 134 Mass. 265; Flack v. Garland, 8 Md. 1S8; Simmons v. Clark, 56 I11. 96; Pettis v. Ray, 12 R. I. 344; Hoxsie v. Lumber Co., 41 Minn. 548, 43 N. W. 476; Schlitz v. . Meyer, 61 Wis. 418, 21 N. W. 243; Cobb v. Malone, 86 Ala. 571, 6 South. 6; Ogilvie v. Hallam, 58 Iowa, 714, 12 N. W. 730; Browning v. Crouse, 43 Mich. 489, 5 N. W. 664; Troutman v. Lucas, 63 Ga. 466; Frost v. Johnson, 8 Ohio, 393; Simmons v. Hamilton, 56 Cal. 493; Johnson's Adm'r v. Hunt. 81 Ky. 321; Hemingway v. Stansell, 106 U. S. 399, 1 Sup. Ct. 473, 27 L. Ed. 245; Yazoo & M. V. R. Co. v. Fulton, 71 Miss. 385, 14 South. 271; Welch v. Miller, 70 Vt. 108, 39 Atl. 749. In HARRISON v. HENDERSON, 67 Kan. 194, 72 Pac. 875, 62 L. R. A. 760, 100 Am. St. Rep. 3S6, Throckmorton Cas. Contracts, 418, it is said, per Cunningham, J.: "An accord is an agreement, an adjustment, a settlement of former difficulty, and presupposes a difference, a disagreement, as to what is right. A satisfaction, in its legal significance in this connection, is a performance of the terms of the accord." See "Accord and Satisfaction," Dec. Dig. (Key-No.) 1; Cent. Dig. 1-13. 65 McManus v. Bank, L. R. 5 Exch. 65. See "Accord and Satisfaction" Dec. Dig. (Key-No.) 5; Cent. Dig. 40-45).

As we have seen, a part payment of a liquidated debt does not constitute a discharge of the entire debt, even though it is accepted as such by the creditor, unless it is accompanied by a release under seal or by a new consideration.71 Where, however, the debt is unliquidated or the amount is in dispute, a payment of a less amount than the sum claimed on condition that it be accepted in full discharge of the debt constitutes an accord and satisfaction.72 In this case the act of the creditor in accepting payment constitutes evidence of his assent to the terms on which it is tendered.73 But if the payment is to constitute a satisfaction it must appear that it was so understood by the creditor at the time it was received by him.74 A simple tender of a balance as the amount in good faith believed by the debtor to be due "does not carry with it an implication or conclusion that by such tender the debtor paid, or that the creditor agreed to receive, the same in full of the amount due, where there had been no prior disagreement or discussion as to what was actually due." 75 66 Babcock v. Hawkins, 23 Vt. 561; Morehouse v. Bank, 98 N. Y. 503; Whitney v. Cook, 53 Miss. 551; Jones v. Perkins, 29 Miss. 139, 64 Am. Dec. 136; Heirn v. Carron, 11 Smedes & M. (Miss.) 361, 49 Am. Dec. 65; Christie v. Craige, 20 Pa. 430; Bradshaw v. Davis, 12 Tex. 336; Bennett v. Hill, 14 R. I. 322; Schweider v. Lang, 29 Minn. 254, 13 N. W. 33, 43 Am. Rep. 202; Sioux City Stock-Yards Co. v. Packing Co., 110 Iowa, 396, 81 N. W. 712. See "Accord and Satisfaction;' Dec. Dig. (Key-No.) 19; Cent. Dig. 136-139. 67 Goddard v. O'Brien. 9 Q. B. Div. 37; Witherby v. Mann, 11 Johns. (N. Y.) 518; Guild v. Butler, 127 Mass. 386; Varney v. Conery, 77 Me. 527, 1 Atl. 683; Yates v. Valentine, 71 I11. 643; Mason v. Campbell, 27 Minn. 54, 6 N. W. 405. See "Accord and Satisfaction," Dec. Dig. (Key-No.) 5; Cent. Dig. 40-45. 68 Ante, p. 165. 69 Ante, p. 163. 70 Preston v. Grant, 34 Vt. 201; Boston Rubber Co. v. Wringer Co., 58 Vt. 551, 5 Atl. 407. See "Accord and Satisfaction," Dec. Dig. (Key-No.) 16; Cent. Dig. 116-122. 71 Ante, pp. 161-164. 72 Nassoiy v. Tomlinson, 148 N. Y. 326, 42 N. E. 715, 51 Am. St. Rep. 695. See "Accord and Satisfaction;' Dec. Dig. (Key-No.) 10; Cent. Dig. 61-74. 73 In England, the question as to whether there has been an accord and satisfaction is one of fact, and the mere circumstance that the creditor has kept money or a check tendered in full payment of an unliquidated demand does not raise a conclusive presumption that it has been accepted in full satisfaction. Day v. McLea, 22 Q. B. Div. 610. To the same effect, see Tompkins v. Hill, 145 Mass. 379, 14 N. E. 177. The American cases, however, generally hold, anomalously, that in such case an accord and satisfaction results, even though the creditor insists that the payment is accepted merely We have already fully considered the question of the sufficiency of the consideration.