Legal Memorandum: Definition of Accord and Satisfaction in MN

Issue: What is accord and satisfaction under Minnesota Law and under the U.C.C.?

There are many definitions of accord and satisfaction.  See, e.g., Restatement (Second) of Contracts § 281.  Generally speaking, an accord and satisfaction is a method of discharging a contract or cause of action, whereby the parties agree to give and accept something in settlement of the claim or demand one has against the other, and perform such agreement; the “accord” is the agreement, and the “satisfaction” its execution or performance.  See id.  Stated another way, an accord is a contract in which a debtor offers a sum of money, or some other stated performance, in exchange for which a creditor promises to accept the performance in lieu of the original debt.  See Don Kral Inc. v. Lindstrom, 286 Minn. 37, 39, 173 N.W.2d 921, 923 (1970); Restatement (Second) of Contracts § 281 (1981); 6 Arthur L. Corbin, Corbin on Contracts § 1276.  In other words, the satisfaction is the performance of the accord, generally the acceptance of money, which operates to discharge the debtor’s duty as agreed to.  Don Kral, 286 Minn. at 39, 173 N.W.2d at 923; Restatement (Second) of Contracts § 281; 6 Corbin, supra, § 1276.  See also Saul Subsidiary II Ltd. Partnership v. Venator Group Specialty, Inc., 830 A.2d 854 (D.C. 2003) (stating that an accord and satisfaction is a valid affirmative defense to a breach of contract claim if there is proof of (1) a legitimately disputed or unliquidated claim; (2) a mutual agreement that the debtor will pay […]