Key Takeaway
New York court ruling clarifies that accepting partial payment doesn't create accord and satisfaction, even when check states "paid in full" without proper agreement.
Many people believe that writing “paid in full” on a check creates an automatic legal settlement, but New York law tells a different story. This common misconception can lead to serious consequences for both debtors trying to settle claims and creditors who inadvertently accept such payments. Understanding the legal requirements for accord and satisfaction is crucial for anyone involved in debt disputes or settlement negotiations.
The concept of accord and satisfaction involves replacing an existing obligation with a new agreement. However, courts don’t simply accept any attempt at unilateral settlement, especially when it involves only partial payment of an undisputed debt. This principle protects creditors from debtors who might try to manipulate the system by making partial payments with restrictive language.
Jason Tenenbaum’s Analysis:
Nwulu-Njoku v Azuaru, 2014 NY Slip Op 51878(U)(App. Term 2d Dept. 2014)
“Contrary to defendant’s contention, plaintiff’s acceptance of her check did not constitute an accord and satisfaction. It is well settled that “acceptance of part payment of a liquidated claim is no defense to an action for the balance, even where part payment is in the form of a check reciting that it is in full settlement, in the absence of a signed agreement or some consideration which is new or collateral to the partial payment”
This goes against the usual thought that if you write “paid in full”, the claim is not necessarily “paid in full”.
Key Takeaway
Simply writing “paid in full” on a partial payment check doesn’t automatically settle a debt under New York law. Courts require either a signed settlement agreement or some additional consideration beyond the partial payment itself. This ruling demonstrates why proper procedural compliance is essential in legal matters, as informal attempts at settlement may not provide the protection parties expect.
