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Accord and Satisfaction


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There is one affirmative defense that I am having difficulty understanding. From some of my readings, most of the defendants were claiming Accord and Satisfaction as one of their affirmative defense. Here is an example:

“Defendant claims Accord and Satisfaction as Defendant alleges that the original creditor accepted payment from a third party for the alleged debt, or a portion of the alleged debt, or that the original creditor received other compensation in the form of monies and/or credits”.

However, as I was doing my research I found these (please see below). The Law does not state about a third party making payments. So why does almost everybody claiming Accord and Satisfaction as affirmative defense. One has to remember that the defendant bears the burden of proving it. The defendant did not make the payment, it was the third party. Somehow, this one does not click at all to me unless, somebody say something that will convince me otherwise. I am a newbie.

1) Copied from the court form:

Attachment 4 - AFFIRMATIVE DEFENSES

Check all boxes that apply to your case

• Accord and Satisfaction

You may use this defense if you and the plaintiff agreed to settle the claim for a lower amount than the lawsuit is asking for and you have paid the lower amount.

2) Copied from uslaw.com:

In contract law, 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.

If a person is sued over an alleged debt they bear the burden of proving the affirmative defense of accord and satisfaction.

Accord and satisfaction is a settlement of an unliquidated debt. For example, a builder is contracted to build a homeowner a garage for $35,000. The contract called for $17,500 prior to starting construction, to disburse $10,000 during various stages of construction, and to make a final payment of $7,500 at completion. At completion, the homeowner complained about inferior work quality and refused to make the final payment. After a mutual settlement agreement, the builder accepted $4,000 as full payment. Thereby, a new contract was formed by offer, acceptance, and consideration. The consideration is that for a $3,500 savings, the homeowner gives up that which he is entitled, a well-constructed garage. The builder gives up his right to full price to avoid suit for inferior performance. When accord and settlement has occurred, the homeowner and builder have given up his right to sue for more money under this settlement agreement.

The accord agreement must be transacted on a new agreement. it must therefore have the essential terms of a contract, (parties, subject matter, time for performance, and consideration). If there is a breach of the accord there will be no "satisfaction" which will give rise to a breach of accord. In this instance the non-offending party has the right to sue under either the original contract or the accord agreement.

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I don't really understand your question. Typically, accord and satisfaction applies when a plaintiff agrees to accept $2,000, for example, in full satisfaction of a $5,000 debt. After plaintiff is paid the full $2,000, he turns around and sues for the remaining $3,000.

Are you concerned that it applies to a third party payment or do you WANT it to apply in that situation?

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I think your understanding is correct.

A lot of people will come to a forum such as this one and go to the sticky with all of the examples.

They go through this laundry list of possible affirmative defenses, and some will list all of them with no understanding of them, cause they sound good and really "legal".

They tend to go a little over board on being pro-active because they are scared and really want the suit to go away. They are in effect looking for a "magic bullet" to fire back, and will shotgun the laundry list desperately hoping that something will wound or kill the other parties cause of action with out really understanding the defenses.

EDIT PART. State law will also come into play. Just look at all the differing SOL's for the various states. Some states may allow accord and satisfaction from a third party to stand as a defense. The thing is in this scenario even if the OC is in effect "satisfied" the purchaser is not and allegedly now owns the debt.

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I don't really understand your question. Typically, accord and satisfaction applies when a plaintiff agrees to accept $2,000, for example, in full satisfaction of a $5,000 debt. After plaintiff is paid the full $2,000, he turns around and sues for the remaining $3,000.

Are you concerned that it applies to a third party payment or do you WANT it to apply in that situation?

I understand that when the plaintiff, whether it be the original creditor or third/fourth collection agency (new owner), turned around and sued the debtor after the settlement of the full amount of $2,000. This is the right time for the defendant to claim accord and satisfaction as an affirmative defense. This is clear to my simple mind.

But in another scenario, where the original creditor charged off and sold the $5,000 account to a third party, then the 3rd to the 4th party and so on and so forth. The last party now decided to sue the debtor for $5,000 with out entering into a settlement agreement, thus the debtor did not pay a dime. So can the debtor, now the defendant, claim accord and satisfaction as affirmative defenses along with the 2nd and 3rd defense.

1) Defendant claims Accord and Satisfaction as Defendant alleges that the original creditor accepted payment from a third party for the purported debt, or a portion of the purported debt, or that the Original Creditor received other compensation in the form of monies or credits from the Plaintiff.

2) Defendant claims Lack of Privity as Defendant has never entered into any contractual or debtor/creditor arrangements with Plantiff.

3) As and for a Third Defense

Plaintiff admits to purchasing the defaulted debt allegedly owned by the Defendant, causing Plaintiff's injury to its own self, therefore Plaintiff is barred from seeking relief for damages.

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where the original creditor charged off and sold the $5,000 account to a third party, then the 3rd to the 4th party and so on and so forth. The last party now decided to sue the debtor for $5,000 with out entering into a settlement agreement, thus the debtor did not pay a dime. So can the debtor, now the defendant, claim accord and satisfaction as affirmative defenses along with the 2nd and 3rd defense.

No, A/S doesn't apply in that scenario.

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I think your understanding is correct.

A lot of people will come to a forum such as this one and go to the sticky with all of the examples.

They go through this laundry list of possible affirmative defenses, and some will list all of them with no understanding of them, cause they sound good and really "legal".

They tend to go a little over board on being pro-active because they are scared and really want the suit to go away. They are in effect looking for a "magic bullet" to fire back, and will shotgun the laundry list desperately hoping that something will wound or kill the other parties cause of action with out really understanding the defenses.

EDIT PART. State law will also come into play. Just look at all the differing SOL's for the various states. Some states may allow accord and satisfaction from a third party to stand as a defense. The thing is in this scenario even if the OC is in effect "satisfied" the purchaser is not and allegedly now owns the debt.

Thanks Montanatim

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I think your understanding is correct.

A lot of people will come to a forum such as this one and go to the sticky with all of the examples.

They go through this laundry list of possible affirmative defenses, and some will list all of them with no understanding of them, cause they sound good and really "legal".

They tend to go a little over board on being pro-active because they are scared and really want the suit to go away. They are in effect looking for a "magic bullet" to fire back, and will shotgun the laundry list desperately hoping that something will wound or kill the other parties cause of action with out really understanding the defenses.

EDIT PART. State law will also come into play. Just look at all the differing SOL's for the various states. Some states may allow accord and satisfaction from a third party to stand as a defense. The thing is in this scenario even if the OC is in effect "satisfied" the purchaser is not and allegedly now owns the debt.

Thanks. I appreciate your thoughts on this.

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