How do courts treat checks tendered as payment in full?

🤔 Contracts • Excuse of Non-Performance K#137

Legal Definition

Where a claim is uncertain, or subject to a genuine dispute, courts will accept an accord and satisfaction that is accomplished by a good faith tender and acceptance of a check that conspicuously states it is tendered in full satisfaction of the debt.

Plain English Explanation

If Bob owes Sam money, and it is clear Bob owes Sam that money, and it is clear that Bob does not dispute whether he owes that much money, then Bob is not allowed to negotiate down the amount of money owed by paying some partial amount of the debt. However, if Bob either disputes that they owe the amount claimed by Sam, or if the debt is not yet required to be paid, then Bob may offer to pay a reduced amount of money in exchange for Sam agreeing that the debt has been satisfied and to leave him alone.

This happens a lot when it comes to medical bills in the United States. Someone will go see the doctor, get billed an unexpected amount, and then negotiate with the doctor to pay a reduced rate that they can afford. If the person who owes money pays with a check that clearly says "payment in full" on the memo line, cashing it acts as acceptance of those terms.

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How do courts treat checks tendered as payment in full?

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