Marton Remodeling v. Jensen
Supreme Court of Utah, 1985.
706 P.2d 607.
Jensen hired Marton to do some remodeling. The price was on a “time and materials” basis. When Marton finished the job, they billed Jensen for $6,500. Jensen thought that was excessive and offered to pay what he thought he services were worth, which was $5,000.
- So he sent Marton a check for that amount, and included a condition:
- “Endorsement hereof constitutes full and final satisfaction.”
- Marton then wrote “not full payment” below the condition, cashed the check, and sued to recover the rest.
- The lower court ruled in favor of Marton:
- $1,500 for the unpaid balance, as well as attorney’s fees.
Did cashing the check amount to an accord and satisfaction?
Yes. Case reversed.
Accord and satisfaction: An “accord” arises when
(1) a creditor promises to accept from the debtor a performance different from that currently owed by the debtor;
(2) the debtor promises to provide the different performance to the creditor (if a bilateral contract) or actually provides the different performance to the creditor (if a unilateral contract); and
(3) the parties expressly or impliedly agree that the debtor’s original contract duty will be discharged upon the alternative performance (“satisfaction”).
A “satisfaction” is the performance by the debtor of the promised alternative performance. An “accord and satisfaction” occurs when there is “satisfaction” (i.e., performance) of the “accord.”
Note: There isn’t an automatic accord and satisfaction every time a creditor cashes a check bearing a “paid in full” notation, however:
- When there’s a bona fide dispute and a check is tendered in full payment, the creditor may NOT disregard the condition attached.