Parties

Accord and satisfaction refers to the purchase by one party to a contract of a release from his obligations under it when the other party has already performed his side of the bargain.

It is a method of discharging a claim whereby the parties agree to give and accept something in settlement of the claim and perform the agreement.  In such cases, the accord is the agreement and the satisfaction is its execution or performance.

Since the accord agreement is transacted on a new agreement, it must therefore have the essential terms of a contract, (parties, subject matter, time for performance, and consideration).

Therefore all requirements necessary to constitute a valid agreement are also required for the formation of a valid accord.  This includes factors like competent parties, valid subject matter, consideration etc.  A person is competent to enter into an accord and satisfaction agreement if they have the power and capacity to enter into the formation of a valid contract.

An accord and satisfaction requires competent parties.  In the case of O’Connor v. United States[i], it was observed by the court that a valid accord and satisfaction requires four elements:

(1) proper subject matter;

(2) competent parties;

(3) a meeting of the minds of the parties; and

(4) consideration.

In its most common form, an accord and satisfaction exists as a mutual agreement between the parties in which one pays or performs and the other accepts payment or performance in satisfaction of a claim or demand which is a bona fide dispute.[ii]

Since accord and satisfaction requires the parties to be competent, an accord and satisfaction agreement cannot be held binding on a minor.  The general principle that an infant may avoid all contracts he or she makes, with the exception of contracts for necessities, may permit an infant to avoid a contract for an accord and satisfaction.[iii]  Therefore, an executed accord and satisfaction cannot be held to be binding on a minor.[iv]


[i] 308 F.3d 1233 (Fed. Cir. 2002)

[ii] Nev. Half Moon Mining Co. v. Combined Metals Reduction Co., 176 F.2d 73, 76 (10th Cir. 1949).

[iii] Russell v. Buck, 116 Vt. 40, 68 A.2d 691 (1949).

[iv] Bromley b. n. f. v. School District, 47 Vt. 381


Inside Parties