Marton Remodeling v. Jensen
Supreme Court of Utah, 1985.
706 P.2d 607.

Facts:

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.

History:

  • The lower court ruled in favor of Marton:
    • $1,500 for the unpaid balance, as well as attorney’s fees.

Issue:

Did cashing the check amount to an accord and satisfaction?

Holding:

Yes. Case reversed.

Reasoning:

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.