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Debtor’s Offer

In applying the statutory doctrine of accord and satisfaction, common law principles regarding the nature of the offer are relevant.[i]  A debtor’s offer must be made in full satisfaction of the creditor’s claim.  The offer must be accompanied by such acts or declarations amounting to a condition that if the offered performance is accepted, it is to be in full satisfaction.  Moreover, the offer must be of such a character that the creditor is bound to understand it was made subject to that condition.[ii] As long as the statement that the offer is intended as full satisfaction is clear, full, and explicit and not susceptible to any other interpretation, the debtor is not required to use any set language in making an offer of full settlement.[iii]

[i] Gelles & Sons General Contracting, Inc. v. Jeffrey Stack, Inc., 264 Va. 285, 569 S.E.2d 406, 48 U.C.C. Rep. Serv. 2d 1429 (2002).

[ii] Fort Smith Service Finance Corp. v. Parrish, 302 Ark. 299, 789 S.W.2d 723 (1990)

[iii] Indiana Lumbermen’s Mut. Ins. Co. v. State, 1 S.W.3d 264 (Tex. App. Fort Worth 1999).

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