Accord and Satisfaction is a legal concept in contract law that pertains to the resolution of disputes over payment or obligations. It occurs when two parties agree to settle a claim or debt that is disputed or not yet fully satisfied. The process involves two key elements: the accord, which is the agreement to accept a different performance than originally promised, and satisfaction, which is the fulfillment of that agreement.
In a financial context, if a debtor cannot meet the full amount owed, the creditor may agree to accept a lesser amount as full payment, thus discharging the obligation. This is beneficial for both parties: the debtor avoids further legal action or debt, while the creditor receives some payment instead of none.
Accord and satisfaction is particularly relevant in negotiations over delinquent accounts or during financial disputes, as they offer a clear path to resolve disagreements, ensure that both parties can move forward, and help maintain business relationships by preventing protracted conflicts.
