When a debtor pays the creditor an amount less than the entire liquidated claim before the debt is due and the creditor accepts the early payment in full satisfaction of the claim, such payment is sufficient consideration to support an accord and satisfaction.[i]

Under the common law, the acceptance of a smaller sum for a debt due, though agreed and expressed to be payment in full, will not effect the intended satisfaction of the total debt since the agreement lacks consideration.[ii] However as per doctrine of accord and satisfaction if the debtor pays the debt amount in full satisfaction of claim before the debt is due and the creditor accepts it, the debt will be discharged.

In, First Hartford Realty Corp. v. Ellis,[iii] court held that “although part payment of a debt does not operate to discharge the whole if the creditor does not assent to receive it as such; part payment prior to maturity is consideration for a promise to discharge the entire debt and it constitutes satisfaction of the debt if the creditor accepts it as such.”

[i] Crow v. Gore, 85 F.2d 291 (D.C. 1936)

[ii] In re Zerodec Mega Corp., 47 B.R. 304 (Bankr. E.D. Pa. 1985)

[iii] 181 Conn. 25 (Conn. 1980)