Definition of accord and satisfaction’
Accord and satisfaction is a legal contract whereby two parties agree to comply with the requirements in tort, contract or other commitment for the amount and on terms that differ from the original amount of the contract, or claim. Accord and satisfaction is also used for the settlement of legal claims before bringing them to court.
Breaking accord and satisfaction’
Agreement agreement on new contract terms, and compliance with performance conditions under the contract. When there is accord and satisfaction, and performance (or satisfaction) is performed, all previous claims related to the matter are extinguished.
When the performance of debt
Accord and satisfaction is a concept from the field of contract law, which generally applies to the procurement of release from debt obligations. Accord and satisfaction may occur in debt negotiations with the original credit agreement, for example, between the Bank and the company were revised, and the company supplies to the new conditions. The new terms could allow the company to make more, smaller payments; to repay the debt at the reduced rate; to return an amount less than the original obligation; or any other agreement.
If for some reason the company does not deliver to the new conditions, he may be liable for the original contract because it did not meet the terms of the agreement. The agreement does not replace the original contract; and, it suspends the possibility that the contract will be performed, provided that the terms of the agreement are not satisfied as agreed.
The advantages of accord and satisfaction
Accord and satisfaction can be used as a form of compromise that benefit both parties when the original terms of the contract can not be met for any reason. When accord and satisfaction is achieved in the debt, the creditor still receives some payment of the debt and the debtor is not carried out until complete fulfilment of obligations.
For example, a homeowner hires a contractor to renovate his or her kitchen for $ 30,000. The contract requires 12,000 $down payment, $10,000 was paid during the repair process, and the remaining $8,000 to be paid by the end of the kitchen. However, when in the kitchen, the homeowner finds a job carelessly and refuses to pay. Accord and satisfaction can be achieved, in which the landlord agrees to pay $3,000; he or she receives a discount on the cost of food in exchange for what poorly constructed the kitchen, and waives the right to sue. The contractor pays $5,000 in order to avoid harassment by the landlord, and gives him the right to sue for the full $8,000.