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Maryland – Accord and Satisfaction

An accord and satisfaction ordinarily concerns monetary settlements of debts or liabilities.  However, other settlements not involving an exchange of funds also come under its purview.[i]  The principle of accord and satisfaction is based on equity and is essentially contractual.  Consideration for an accord and satisfaction can be monetary or non-monetary.[ii]

While an accord is an agreement by one party to give or perform and by the other party to accept, in settlement or satisfaction of an existing or matured claim, something other than that which is claimed to be due, the satisfaction is the execution or performance of the agreement.[iii]  In the event of a dispute of claim, the creditor’s acceptance of payment, coupled with knowledge that payment was intended fully to satisfy a disputed claim, constitutes an accord and satisfaction that bars any further recovery.[iv]

Accord and satisfaction is an affirmative defense and the defendant must prove:

  • that a dispute arose between the parties about the existence or extent of liability;
  •  that, after the dispute arose, the parties entered into an agreement to compromise and settle the dispute by the payment by one party of a sum greater than that which he admits he owes and the acceptance by the other party of a sum less than that which he claims is due; and
  • that the parties performed the agreement as stipulated.[v]

[i] Automobile Trade Asso. v. Harold Folk Enterprises, Inc., 301 Md. 642, 665 (Md. 1984)

[ii] Id. at 666

[iii] Weston Builders & Developers, Inc. v. McBerry, LLC, 167 Md. App. 24, 55 (Md. Ct. Spec. App. 2006)

[iv] Wickman v. Kane, 136 Md. App. 554, 561 (Md. Ct. Spec. App. 2001) 

[v] Air Power, Inc. v. Omega Equip. Corp., 54 Md. App. 534, 538-39, 459 A.2d 1120 (1983)

Inside Maryland – Accord and Satisfaction