Shirley Rhone suffered injuries when a truck struck the vehicle in which she was riding. State Auto Mutual Insurance Co was the insurer involved and provided personal injury coverage. Shirley went to see Dr. Allen, a chiropractor who provided treatments

Question

32 times over a 3-month period. Dr. Allen billed State Auto in three separate billings. After paying the first two billings in full, State Auto expressed concern about whether Dr. Allen's charges were excessive. State Auto hired Chiropractic Consultants, Inc to evaluate Dr. Allen's billings. The consultants advised that Dr. Allen's billings were indeed excessive. State Auto then telephoned Dr. Allen and offered a partial payment to settle the account. After this conversation, State Auto issued and sent a check for $864 payable to Dr. Allen. On the face of the check, State Auto noted the total amount allocated to each claim and typed "settlement in full." On the reverse side it said, "The endorsement of this draft by the payee constitutes a clear release and full settlement of the claim or account shown on the other side." Upon receipt of the check, Dr. Allen cashed the check. He then sought payment of an additional $895 . State Auto claims there was an accord and satisfaction with respect to the amount due for services rendered by Dr. Allen. What are the requirements of an accord and satisfaction? Were those requirements met in this case?

Answer 1

An accord is the agreement to settle for less than the creditor claims. The satisfaction is the actual payment of that compromised amount. There must be: 1) an unliquidated debt, 2) an agreement between the parties that the creditor will accept as full payment a sum less than originally claimed, and 3) payment by the debtor of the agreed amount. An accord and satisfaction is valid consideration to support a creditor's agreement to drop all claims. It appears that all the elements of an accord and satisfaction were satisfied in this case.