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Part Payment by Agent or Fiduciary

If an agent collects money that belongs to his/her principal and only pays a part of it retaining the balance, then the principal’s acceptance and retention of the amount paid will not constitute an accord and satisfaction[i].  The principal can take subsequent action to recover the balance due from the debtor irrespective of the fact that the debtor has paid the amount to the agent.

Whereas, if there is exists a fiduciary relationship between the parties, then the principles governing the determination of accord and satisfaction will be enforced with greater strictness[ii].  If the alleged accord and satisfaction arises out of an agreement with a fiduciary, the defendant asserting the defense must show the accord was an express agreement made upon full revelation[iii].

However, a fiduciary relationship is not an absolute bar preventing an accord and satisfaction.  It is only a fact that has to be considered along with other circumstances[iv].

In Greenberg v. Pine Hollow Standardbred Sale & Management Corp[v], defendants were a stud farm and its officers and plaintiff was the owner of a horse.  By an oral contract, plaintiff engaged the stud farm to sell his undivided four share interest in a horse standing at the stud farm.  Upon sale of the owner’s share of the horse, the stud farm retained a commission.  The plaintiff filed an action for breach of contract.  The court gave judgment in favor of the plaintiff finding that the stud farm had improperly made a unilateral modification of the contract as their initial agreement did not mention anything about assessing commission to find a buyer for the plaintiff.

[i] Mayrath Co. v. Helgeson, 258 Iowa 543 (Iowa 1966)

[ii] Avery v. Schuman Co., 159 F. Supp. 906 (D. Cal. 1958)

[iii] Jones v. Allstate Ins. Co., 146 Wn.2d 291 (Wash. 2002)

[iv] Indianapolis v. Domhoff & Joyce Co., 69 Ohio App. 109 (Ohio Ct. App., Hamilton County 1941)

[v] 94 A.D.2d 836 (N.Y. App. Div. 3d Dep’t 1983)

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