Arbitration & Mediation

Accord and Satisfaction: No Signature, No Intent, But Compelled

By Christopher B. Hopkins, Esq.

We sometimes question whether courts truly view arbitration clauses in the "preferred" status that the law provides. Given the number of ways that a person can escape arbitration -- explored and emphasized in nursing home cases -- we question whether the "general rule" of public-policy-favors-arbitration is going to be consummed by the exceptions, a la legal concepts like the Economic Loss Rule.

Is "accord and satisfaction" a new method of ADR? Should you force an opponents hand with this settlement technique?

"Accord and satisfaction" is a legal concept which rarely rears its head in appeals despite the fact that it is a common technique in the business/loan world. Typically, the terms (either in a letter or by writing "accord and satisfaction" on a check) are that a debt is paid by the receiving party cashing the check. Under Florida law, the terms are (1) mutual intent to contract and (2) performance.

In Pamela Cristina Martinez, Maria Salvage et al. v. South Bayshore Tower, LLP, a land developer abandoned a project and returned the purchaser's money with a letter indicating that cashing the check amounted to accord and satisfaction of any dispute. The purchasers cashed the checks then sued claiming that they did not intend to settle their dispute.

The court held that, despite the purchaser's protest, there WAS intent because of their actions of cashing the check. Likewise, no signature is required. Indeed, the Third DCA proclaimed that there is a "strong public policy" for accord and satisfaction since it is a "convenient and valuable tool for resolving disputes informally."

Full post as published by Florida Arbitration Law on March 11, 2008 (boomark / email).