California – Accord and Satisfaction


According to Cal Civ Code § 1521, an accord is an agreement to accept, in extinction of an obligation, something different from or less than that to which the person agreeing to accept is entitled.  Cal Civ Code § 1522 states that though the parties to an accord are bound to execute it, it does not extinguish the obligation until it is fully executed.

Cal Civ Code § 1523 defines satisfaction as acceptance, by the creditor, of the consideration of an accord.  Satisfaction extinguishes the obligation.  Moreover, Cal Civ Code § 1524 explains that part performance of an obligation extinguishes the obligation, if performed either before or after a breach thereof, where expressly accepted by the creditor in writing, in satisfaction, or rendered in pursuance of an agreement in writing, though without any new consideration.

According to Cal Civ Code § 1526, where a claim is disputed or unliquidated and a check or draft is tendered by the debtor in settlement thereof in full discharge of the claim, and the words “payment in full” or similar words are notated on the check or draft, the acceptance of the check or draft does not constitute an accord and satisfaction if the creditor protests against accepting the tender in full payment by striking out or deleting that notation, or if the acceptance of the check or draft was inadvertent or without knowledge of the notation.

However, the acceptance of a check or draft constitutes an accord and satisfaction, if a check or draft is tendered pursuant to a composition or extension agreement between a debtor and its creditors, all creditors of the same class are accorded similar treatment, and the creditor receives the check or draft with knowledge of the restriction.