Idaho Law Blog
In Idaho, an accord and satisfaction is a method of resolving a disputed claim between two parties. See Idaho Code § 28-3-310. Here’s a simple example of how it works. Let’s say a painter agrees to paint a homeowner’s living room for $500. After finishing the work, the painter sends the homeowner a bill for $500. The homeowner responds with a letter stating he doesn’t owe anything because the paint job is terrible and he had to hire a second painter to come in and do it right. In reply, the painter threatens to sue the homeowner if he doesn’t get full payment.
Let’s suppose that the homeowner is stressed about the dispute and the possibility of being sued, so he sends the painter a check for $250 with large, red print on face of the check stating, “Payment in full for painting my living room!” The painter receives the check, decides that $250 is better than trying for $500 in court, so he cashes the check. When he does so, the matter is legally resolved. The parties have performed an accord and satisfaction.
This example illustrates the four necessary elements of an accord and satisfaction:
1. A Good-Faith Tendering of an Instrument. One party must offer or provide the other payment through a negotiable instrument, such as a check, banknote, or promissory note, as full satisfaction of the claim.
2. A Bona Fide Dispute. If there is no genuine dispute, there can be no accord and satisfaction. In the above example, if the homeowner had simply responded to the initial bill with the check for $250, the painter might have cashed the check and requested the remainder of the bill, thinking the homeowner mistakenly thought the job was for $250 only. In such a scenario, there is no bona fide dispute, so the $250 payment does not create an accord and satisfaction.
3. Payment of the Instrument. In the above example, if the painter never cashed the $250 check, there would not be any accord and satisfaction. However, under Idaho law, even if a party accepts payment, he can reverse the effect of this acceptance by tendering repayment to the other party within 90 days. So, in the above example, after cashing the check, the painter would have 90 days to return the $250 to the homeowner to avoid an accord and satisfaction.
4. Conspicuous Statement. The negotiable instrument or accompanying document must contain a conspicuous statement that the tendered payment is in full satisfaction of the claim. In our example above, the large, red print on the face of the homeowner’s check satisfies this requirement. A similarly conspicuous statement could be included in an accompanying letter separate from the check.
Read the statute on accord and satisfaction and Idaho case law (Holley v. Holley, 128 Idaho 503, 510, 915 P.2d 733, 740 (Ct. App. 1996) and Shore v. Peterson, 146 Idaho 903, 910, 204 P.3d 1114, 1121 (2009)), and talk with an experienced civil and commercial litigation attorney at Racine Olson to better understand this legal doctrine and how it might affect you.