RTL Corp. v. Manufacturer's Enters., Inc. - 429 So. 2d 855 (La. 1983)

Rule:

A contract is the law between the parties and it cannot be revoked, unless by mutual consent of the parties, or for causes acknowledged by law. La. Civ. Code Ann. art. 1901. Implicit in this precept is the proposition that when a dispute arises between the parties to a contract as to its provisions, they may by further mutual consent freely modify their contract. Furthermore, article La. Civ. Code Ann. art. 3071 specifically provides that persons may enter a contract of transaction or compromise to adjust their differences by mutual consent for the purpose of preventing or putting an end to a lawsuit. These precepts are called into play when a debtor tenders a check as payment in full of an obligation due under contract to his creditor, the amount of which has been disputed by the parties. This offer by the debtor confers on the creditor a specific right to consent to full satisfaction of the debt by accepting the check or to retain his rights under the prior agreement by rejecting the check. Without the debtor's express or tacit consent, the creditor cannot make use of the check and then renounce the condition upon which the debtor made the offer.

Facts:

The suit arose from a dispute between the parties to a verbal agreement whereby the lessor leased cranes, labor, and accessory equipment to the lessee.  The issue was whether a payment by the lessee constituted full payment or only a partial payment of the obligation. After a trial, the trial court dismissed the suit without reasons; the court of appeal affirmed this judgment on the grounds that the lessor's deposit of a check tendered in full payment by the lessee constituted an accord and satisfaction, thus extinguishing the lessee's obligation. 

Issue:

Did the trial court err in finding that the lessor's deposit of a check tendered in full payment by lessee constituted an accord and satisfaction, thus extinguishing the lessee's obligation?

Answer:

Yes.

Conclusion:

The court found that the lower courts failed to examine the parties' intent, but apparently concluded the lessee's deposit of a full payment check constituted an accord and satisfaction. Even if the lessee's agent did not expressly agree to the lessor's insistence that the check was not full payment, his silence reasonably implied his assent under La. Civ. Code Ann. art. 1817. The evidence was clear and convincing that the lessee withdrew its condition of compromise when its agent allowed the lessor to consider the tendered check as partial payment. Moreover, the invoices prepared for each work shift by the lessor for the lessee's approval stated that the portal-to-portal method was the basis of the agreement. None of the lessee's representatives questioned this arrangement. As the parties did not agree to a specific rate for the various services, they impliedly agreed to reasonable rates for the labor and equipment actually supplied for the transportation and assembly of the cranes pursuant to La. Civ. Code Ann. art. 1816.