Accord and Satisfaction
Accord and Satisfaction
(A concept under the Law of Contracts and sometimes relevant in Tort Law too)
✅ Definition:
Accord and Satisfaction is a legal doctrine whereby a disputed or unliquidated debt or claim is settled by the parties through:
Accord – an agreement to accept something different (often less) than what was originally due, and
Satisfaction – the performance or fulfillment of that new agreement.
Once completed, the original claim is discharged.
🔹 Elements of Accord and Satisfaction:
A Dispute or Unliquidated Claim
There must be a genuine dispute about liability or the amount owed.
Accord (Agreement)
A new contract where one party agrees to accept something different (e.g. less money or different performance) in satisfaction of the original obligation.
Satisfaction (Performance)
The promisor performs the agreed substitute, thus discharging the original obligation.
🔹 Example:
Suppose A owes B ₹10,000, but A disputes the amount and offers to pay ₹7,000 as full and final settlement. If B accepts and receives the ₹7,000, the original ₹10,000 debt is discharged.
🔹 Legal Effect:
Once satisfaction is completed, no further legal action can be taken for the original claim.
If the satisfaction is not performed, the original obligation revives, and the creditor can sue on the original contract.
🔹 Requirements for Validity:
There must be mutual consent.
The agreement must be supported by consideration (the compromise or alternative performance acts as consideration).
The performance must be completed as agreed.
🔹 Case Law Example:
Foakes v. Beer (1884) –
The House of Lords held that a promise to accept part payment of a debt without additional consideration is not binding. This case highlights the need for fresh consideration for a valid accord.
🔹 Relevance in Tort Law:
Sometimes used in torts to settle a claim for damages.
E.g., A person injured in an accident may agree to accept a lump sum payment from the defendant in full settlement. Once accepted and paid, the claimant cannot sue again for further compensation.
✅ Summary Table:
| Term | Meaning |
|---|---|
| Accord | New agreement replacing original obligation |
| Satisfaction | Fulfillment of the new agreement |
| Effect | Discharges original obligation once new performance is completed |
| Requirement | Consent + consideration + performance |
| Used in | Both Contract Law and Tort Settlements |
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