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Distinction from Payment or Release

Payment is the discharge of a pecuniary obligation by the debtor by delivering a specific sum of money or the equivalent of a specific sum. The delivery can be actual or constructive and is made for the purpose of extinguishing an obligation.  Payment requires delivery by the debtor and acceptance by the creditor, both with common purpose.[i]

An accord and satisfaction is generally defined as an agreement to discharge a debt or claim by some performance other than that which was originally due.[ii]  Accord and satisfaction is contractual in nature, and hence the intent of the parties is mandatory.  Thus, a transaction will constitute an accord and satisfaction of a claim only where both parties intend it. Absent such intent, a claim for a specific sum of money cannot be satisfied by partial payment.  When a payment of less than what is claimed is offered and accepted, it will not constitute an accord and satisfaction of the entire claim unless it can be demonstrated that the creditor intended to accept it as full satisfaction.  In the absence of such intent, the partial payment will operate as a discharge of only the amount paid, and the creditor will be entitled to maintain an action to recover the balance of his claim.[iii]  To determine the intent of the parties, it is necessary to examine the language of the order of satisfaction and release in light of the circumstances existing at the time of the transaction.[iv]

An accord and satisfaction is distinguishable from release.  A release is a relinquishment of a right, which may be given gratuitously or for inadequate consideration, while an accord and satisfaction is the discharge of a debt or claim by the acceptance of some payment which is agreed to constitute full satisfaction.[v]  Thus, consideration is not a mandatory element for a release as in the case of accord and satisfaction.

An accord and satisfaction has the same effect as that of a release in its impact on third persons.  Since there can be but a single satisfaction for an injury or wrong, an accord and satisfaction made by one of two or more joint tortfeasors will operate to discharge the others.  However, where a payment made by one joint tortfeasor is not intended to constitute satisfaction in full, it will not result in a discharge of the others, although it will operate as a partial satisfaction to be credited to any recovery against the remaining tortfeasors.[vi]

[i] Parnell v. Sherman, 899 S.W.2d 900 (Mo. Ct. App. S.D. 1995)

[ii] Holman v. Simborg, 152 Ill. App. 3d 453, 456 (Ill. App. Ct. 1st Dist. 1987).

[iii] Id.

[iv] Hulke v. International Mfg. Co., 14 Ill. App. 2d 5 (Ill. App. Ct. 2d Dist. 1957)

[v] Holman, 152 Ill. App. 3d 453, 456.

[vi] Id. At 457

Inside Distinction from Payment or Release