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Texas – Accord and Satisfaction

In Texas, an accord is an agreement whereby one of the parties undertakes to give or perform, and the other to accept, in satisfaction of a claim, liquidated or in dispute, and arising either from contract or from tort, something other than or different from what s/he is, or considers himself/herself, entitled to; and a satisfaction is the execution, or performance of such an agreement.[i]

An accord and satisfaction is considered a substituted contract complete within itself.  Therefore, it must be based upon a consideration the same as any other contract.[ii]  However, the courts of Texas uniformly hold that payment of the amount agreed upon as an accord before the date upon which the original indebtedness becomes due may constitute a valid consideration for an accord and satisfaction and that where the debtor is insolvent, the acceptance of a smaller sum by the creditor may constitute a valid consideration for the new contract, if such payment or insolvency were agreed upon and regarded by the parties as consideration for the new contract.


[i] Texas & P. R. Co. v. Poe, 131 Tex. 337 (Tex. 1938)

[ii] Minchen v. Vernor’s Ginger Ale Co., 198 S.W.2d 613 (Tex. Civ. App. 1946)

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