Accord and satisfaction is an affirmative defense. Therefore the burden of proving all the elements[i] by either clear or convincing evidence[ii] or by a preponderance of the evidence[iii] is on the proponent.
In case of accord and satisfaction, the claimant is also duty bound to show that the alleged accord is supported by sufficient consideration. This can be done either by proving that the claim was unliquidated or disputed.[iv] In the alternative, the claimant may also prove that the claim was liquidated but was supported by consideration additional or collateral to the accord.[v]
The question of whether an accord and satisfaction has been proved is a question of fact. The burden of proving that a valid accord and satisfaction was reached is on the defendants.[vi]
Essentially the elements involved in an accord and satisfaction agreement is that of offer, acceptance and consideration. In the case of Helms v. University of Missouri-Kansas City[vii], it was observed that the burden of proving an accord and satisfaction is simply the burden of proving a contract: offer, acceptance, and consideration. In the case of Webb Business Promotions, Inc. v. American Electronics & Entertainment Corp.[viii], it was observed by the court that once the statutory requirements for accord and satisfaction are met, mutual agreement of the parties to enter into an accord and satisfaction is presumed as a matter of law. However, this presumption may be rebutted where the party challenging the accord and satisfaction can demonstrate, for example, some ambiguity in the language of the instrument or the accompanying communication. This presumption is therefore rebutted in circumstances wherein it can be shown that a reasonable person would not have understood that payment was meant to discharge the obligation.[ix]
Since an accord and satisfaction is basically the substitution of one contract for another, the debtor must prove that the creditor “definitely assented” to the new arrangement.[x] Generally, there is a presumption that parties to an accord and satisfaction intend that performance of the accord, rather than the new agreement itself, satisfy the original obligation. Therefore in order to rebut this presumption, there must be “clear evidence” that the parties intended the new agreement as satisfaction.[xi] In other words, the presumption exists that the intention to relinquish a debt in return for a mere promise to pay a lesser amount, rather than for the performance of that promise, is unusual and is not to be implied in the absence of language compelling that result. In the case of Cullen v. Valley Forge Life Ins. Co.[xii], it was observed that establishing an accord and satisfaction as a matter of law requires evidence that permits no reasonable inference to the contrary and that shows the unequivocal intent of one party to make and the other party to accept a lesser payment in satisfaction of a larger claim. Moreover, in accord and satisfaction cases, payment is a matter of affirmative defense, and the burden of proof lies with the defendant.[xiii]
[i] Sims-Madison v. Inland Paperboard and Packaging, Inc., 379 F.3d 445 (7th Cir. 2004)
[ii] Wallace v. United Mississippi Bank, 726 So. 2d 578 (Miss. 1998)
[iii] Premier Capital, Inc. v. Doucette, 2002 ME 83, 797 A.2d 32, 47 U.C.C. Rep. Serv. 2d 1409 (Me. 2002)
[iv] In re Marriage of Malec, 205 Ill. App. 3d 273, 150 Ill. Dec. 207, 562 N.E.2d 1010 (1st Dist. 1990)
[v] First Nat. Bank, Lexington, Tenn. v. U.S., 12 Cl. Ct. 719 (1987)
[vi] Williams v. B & K Medical Systems, Inc., 49 Mass. App. Ct. 563, 732 N.E.2d 300 (2000)
[vii] 65 Ark. App. 155, 986 S.W.2d 419, 133 Ed. Law Rep. 615 (1999)
[viii] 617 N.W.2d 67, 42 U.C.C. Rep. Serv. 2d 534 (Minn. 2000)
[ix] Webb Business Promotions, Inc. v. American Electronics & Entertainment Corp., 617 N.W.2d 67, 42 U.C.C. Rep. Serv. 2d 534 (Minn. 2000)
[x] Beard v. George, 135 Idaho 685, 23 P.3d 147 (2001)
[xi] Arkansas Val. Feed Mills, Inc. v. Fox De Luxe Foods, Inc., 171 F. Supp. 145 (W.D. Ark. 1959)
[xii] 161 N.C. App. 570, 589 S.E.2d 423 (2003)
[xiii] Community Builders v. Indian Motocycle Assocs., 44 Mass. App. Ct. 537 (Mass. App. Ct. 1998)
