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 Pennsylvania, accord and satisfaction is recognized as a legal means to settle a dispute where the parties agree to new terms that differ from the original contract. This concept is typically used when a debtor offers to pay a lesser amount than what is owed, and the creditor accepts this payment as full satisfaction of the debt. The new agreement, the 'accord,' must be executed with the intention of resolving the dispute, and the 'satisfaction' is the performance of the new agreement. For accord and satisfaction to be legally binding in Pennsylvania, there must be a bona fide dispute regarding the original obligation, a clear and unequivocal offer of partial payment by the debtor, and an acceptance by the creditor. Once the satisfaction occurs, the original contract or obligation is discharged, and the creditor cannot later claim the balance of the original debt. This principle is codified in the Pennsylvania Consolidated Statutes, Title 13 (Commercial Code), and is also supported by case law.