Accord and satisfaction is an enforceable agreement in which the parties agree to discharge a contract, claim, or obligation on terms that differ from the original terms of the contract, claim, or obligation.
In Michigan, accord and satisfaction is a recognized legal principle that allows parties to settle a dispute by agreeing to terms that are different from the original contract or obligation. This typically involves the debtor offering a payment or performance that is different from what was originally agreed upon, and the creditor accepting this as full satisfaction of the debt or claim. The new agreement, the 'accord,' and the execution of that agreement, the 'satisfaction,' together discharge the original contract or obligation. For an accord and satisfaction to be legally binding in Michigan, it must meet certain requirements: there must be a bona fide dispute or unliquidated debt, the debtor must offer a different performance in good faith, and the creditor must accept this performance as full settlement of the obligation. The Uniform Commercial Code (UCC), which Michigan has adopted, also addresses accord and satisfaction in the context of negotiable instruments under Section 3-311. It is important for parties considering an accord and satisfaction to ensure that their agreement is clear and meets all legal requirements to avoid further disputes.