In Idaho, an accord and satisfaction is generally defined as a method of discharging a contract or cause of action, whereby the parties agree to give and accept something in settlement of the claim or demand of the one against the other, and perform such agreement, the “accord” being the agreement and the “satisfaction” its execution or performance.[i] An accord and satisfaction is a substituted contract. The essentials of a valid contract such as proper subject matter, competent parties, a meeting of the minds, and consideration must be present in an accord and satisfaction.
The elements of an accord and satisfaction are:
- a bona fide dispute as to the amount owed;
- that the debtor tendered an amount to the creditor with the intent that such payment would be in total satisfaction of the debt owed to the creditor; and
- that the creditor agreed to accept payment in full satisfaction of the debt, or
- that both the debtor and the creditor understood that the acceptance of the check was in full payment of all sums owed by the debtor.
Idaho law clearly establishes that a substituted performance, other than the payment of money, can support an accord and satisfaction.
The general rule is that the underlying duty or debt is not discharged until there is satisfaction on the accord. The accord is executory, under which the original duty is suspended until satisfaction or breach of the accord. If the accord is breached, the injured party may sue either upon the original obligation or upon the compromise agreement.[ii]
[i] Shore v. Peterson, 146 Idaho 903 (Idaho 2009)
[ii] Holley v. Holley, 128 Idaho 503 (Idaho Ct. App. 1996)