What is accord and satisfaction?

What is accord and satisfaction?

• A. A release of all claims without new consideration.
• B. Agreement to accept performance in the future satisfaction of an existing duty.
• C. A substitution of parties in the contract.
• D. A modification of payment terms only.

Answer: (B)

Accord and satisfaction is a way to settle a debt by agreeing to accept a different performance in full discharge of the original obligation. The idea is that the debtor promises to deliver something new (the accord), and once the creditor accepts that new performance and it is rendered (the satisfaction), the original duty is discharged. This captures why the correct choice describes an agreement to accept future performance that will satisfy the existing duty. It’s not just a release of claims, nor a substitution of parties (that’s a novation), and it isn’t merely changing payment terms—those other scenarios don’t involve substituting the obligation with a new performance and then discharging the old one.

Accord and satisfaction is a way to settle a debt by agreeing to accept a different performance in full discharge of the original obligation. The idea is that the debtor promises to deliver something new (the accord), and once the creditor accepts that new performance and it is rendered (the satisfaction), the original duty is discharged. This captures why the correct choice describes an agreement to accept future performance that will satisfy the existing duty. It’s not just a release of claims, nor a substitution of parties (that’s a novation), and it isn’t merely changing payment terms—those other scenarios don’t involve substituting the obligation with a new performance and then discharging the old one.