Accord and Satisfaction Definition (Full Guide)
What is an Accord and Satisfaction?
The term Accord denotes or depicts an agreement under which a person accepts an amount of or some treasured or valuable consideration, whereas the term Satisfaction denotes or depicts the payment of the considered amount which is agreed in the agreement or contract to be paid or made. And the whole accord and satisfaction agreement formed is termed as accord and satisfaction, and when this agreement is discharged it is referred to as a tort.
So, accord and satisfaction in tort is used when the agreement is settled up or discharged off.
Therefore, Accord and Satisfaction is normally a legal term that signifies taking up reimbursement in exchange of some prescribed or predetermined compulsion from another party.
Points to be noted :
- While taking up the new agreement of Accord and Satisfaction, the existing agreement is adjourned.
- The earlier agreement remains adjourned until the new laws or terms of the
Accord and Satisfaction agreement is followed up.
Accord and Satisfaction definition is an agreement between the two constricting parties who take up an alternative act to do a pre-existing duty that exists between the parties and the agreement’s subsequent performance.
Here, the agreement or contract is termed as the accord and the compensation received from the contract or to be received is termed as satisfaction.
Some of the elements for an accord and satisfaction meaning is summed up as follows:
- The transaction creditor understanding as well as the acceptance of the payment.
- The discharged claim.
- The claimant’s good faith in the dispute.
- The person behind the claim or the dispute.
An accord depicts agreement existing with some conditions and the Satisfaction depicts the parties to the agreement who in term fulfill the obligations. So, the Accord and Satisfaction exists where the parties have fulfilled their promise or obligations and when the contract has fulfilled its objective or purpose. So, the existence of both things takes us to the existence of the Accord and Satisfaction.
After following the accord and satisfaction agreement by the two parties, they can still sue or take up some lawful or legal actions against the other party. So, here ascends the need of the defence of accord and satisfaction which makes sure that the contract of an accord and satisfaction is actually made leading to defending the contract of accord and satisfaction.
Why the Accord and Satisfaction is important?
It is important in settling down the disputes arising in a particular contract.
- The National Insurance Company Limited v. Boghara Polyfab Private Limited
- The Union of India v. M/s Ajit Mehta and the Associates, Pune, and Others, AIR 1990 bom 45
- S.C. Konda Reddy v. Union of India and Anr, AIR 1982 Kant 50
- Payana Reena Saminathan v. Pana Lana Palaniappa (restated in Union of India v Kishori lal Gupta and Bros, AIR 1959 SC 1362)
- The P.K. Ramaiah and Company v. Chairman & Managing Director, National Thermal Power Corporation, 1994(1) SCALE 1
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The Accord and Satisfaction help in settling down the disputes between or arising between the two parties, and acting as an operative tool in resolving the conflicts. But, the scope is quite wide to understand and follow.
After following the accord and satisfaction agreement by the two parties, they can still sue or take some legal actions against the other party. So, here arises the needed of the defence of accord and satisfaction which makes sure that the contract of an accord and satisfaction is actually made.
A novation in a contract requires to release a party, whereas the accord and satisfaction lead to a formation of a new contract between the parties with new terms and conditions.
Yes, consideration is required for an accord and satisfaction contract to be valid as in case of debt consideration, when there is dispute related to the amount of debt.
Executory accord is the one that has not been performed yet. And in this the one existing party agrees to perform differently than the agreed performance of the contract.
The party’s intentions decide the rescission, whereas the consent of all the existing parties is needed or required in the novation which also includes the party who is accepting the debtor as a new person.
The accord and satisfaction can be prevented by returning back the money within 90 days, which will invariably lead out to cancel down or avoid the accord and satisfaction agreement or contract.