According to Iowa courts, accord and satisfaction is a contract substituted for an old contract, which is thereby discharged, or for an obligation or cause of action which is settled. It must have all of the essential elements of a valid contract such as competent parties, a proper subject matter, and a meeting of the minds of the parties with respect to the subject matter.[i] Whether there is accord and satisfaction ordinarily involves a pure question of intention. There is no settlement and no accord and satisfaction unless both parties act knowingly with intent to effect the accord. Furthermore, there can be no accord and satisfaction unless there is a valid consideration.
To constitute a valid accord and satisfaction, it must be shown that the debtor gave the amount in satisfaction, and also that it was accepted by the creditor as such.[ii] Moreover, the agreement need not be express, but may be implied from circumstances.
[i] Kellogg v. Iowa State Traveling Men’s Ass’n, 239 Iowa 196 (Iowa 1947)
[ii] Perin v. Cathcart, 115 Iowa 553 (Iowa 1902)