According to Tennessee courts, “accord and satisfaction” is a term describing the legal consequence of a creditor’s acceptance of a substitute performance for a previously existing claim or prior original duty.[i] Acceptance of the substitute performance discharges the previously existing claim. A debtor’s pleading and proving of the accord and satisfaction is a complete defense to an action by the creditor on the previously existing claim.
To constitute a valid accord and satisfaction it is essential that what is given or agreed to be performed shall be offered as a satisfaction and extinction of the original demand; that the debtor shall intend it as a satisfaction of such obligation, and that such intention shall be made known to the creditor in some unmistakable manner.[ii] Moreover, it is equally essential that the creditor shall have accepted it with the intention that it should operate as a satisfaction. The intention of the parties must be determined from all the circumstances attending the transaction.
[i] Dobbins v. Dabbs, 2007 Tenn. App. LEXIS 39 (Tenn. Ct. App. Jan. 25, 2007)
[ii] Ward v. Wilkinson, 1999 Tenn. App. LEXIS 250 (Tenn. Ct. App. Apr. 19, 1999)