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Does your contract include accord and satisfaction language?
In 2002, the Virginia Supreme Court ruled on a case between a contractor and its customer regarding payment due. The contractor performed brick laying work, the customer was not satisfied with the amount and quality of work done by the contactor, and the customer then disputed the amount of compensation owed to the contractor. When the customer sent the check to the contractor, they included the language “please find a check…representing final payment of the contract.” The contractor then cashed the check and subsequently sued the customer for the balance owed. The customer claimed the contractor could not claim additional monies under the contract due to accord and satisfaction. The court agreed with the customer.
If a person gives over a payment as full satisfaction of the claim that was subject to the dispute with accompanying language saying that the payment is offered as full satisfaction of the claim and the person receiving the payment then cashes the check, the claim is discharged. The court found that the language accompanying payment was not ambiguous but clearly communicated to the contractor that this payment was the final and full payment. By cashing the check, the contractor accepted the payment and was barred from any future payment claims against the customer. As a contractor it is important to be aware of accord and satisfaction and its consequences of waiving future claims.
