When parties agree to change their contract: the law of accord and satisfaction

Have you ever been in a situation where you agreed to pay a specified price for something – and then your expectations were not met by the final product or service? Or, in a business setting, perhaps you had a client or customer who was disappointed, and felt that they did not get their money’s worth. It happens to everyone, at some point.

A hand giving a 3-star rating out of 5.

In such a scenario, the disappointed party might refuse to pay the full contract price, but offer instead to pay a reduced price which (they believe) fairly reflects the actual benefit received. If the parties agree to such a revision, it is binding upon both of them. Furthermore, the party accepting a lesser amount may not later attempt to claim the original amount from the other party.

This situation falls under the contract law concept known as “accord and satisfaction”. The “accord” is the new agreement. The “satisfaction” is the new or changed obligation(s) of the parties to the contract being met. (Of course, as always in contract law, the parties must be acting in good faith.)

Here’s an example:

Holly, a homeowner; hires Chrissy, a cabinet maker; to make and install cabinets in Holly’s kitchen. Holly selects the type of cabinets she wants, and she and Chrissy agree on a total price of $1,000.00. Chrissy finishes the job, but one of the cabinets gets a big scratch on it during the installation. Holly is satisfied overall with the job, but is unhappy about the scratch.

Therefore, Chrissy and Holly agree to reduce the contract price from $1,000.00 to $950.00. This new agreement is the accord. When Holly pays $950.00 to Chrissy in full, this effects satisfaction of the accord. Chrissy may not later demand that Holly pay her another $50.00. Holly may also not demand that Chrissy replace the scratched cabinet.

This constitutes accord and satisfaction.

Here are a couple of photos of the Napa River, from a little weekend hike:

Napa River marshes
Napa River panorama near sunset

** Got a legal subject or question you are curious about? Email it to me at admin@freerangelaw.net. Your question may be discussed in a future blog post!

Please note that the above is offered for educational purposes, and as a means of encouraging intellectual curiosity about the law. The information presented may not take into account every exception, variation, or complication which could apply to someone’s legal matters. Accordingly, nothing in this post or blog is ever intended as, nor should be construed by or relied upon by anyone, as legal advice. If you need legal advice, please consult an attorney who can give you assistance specific to your needs.


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