The rules governing the question of accord and satisfaction are as follows: (1) Whether there has been an accord and satisfaction in any given case is generally a mixed question of law and fact. (2) But where the facts are not in controversy, it is purely a question of law for the court. (3) To create an accord and satisfaction in law, there must be a meeting of minds of the parties upon the subject and an intention on the part of both to make such an agreement. (4) An accord and satisfaction is founded on contract, and a consideration therefor is as necessary as for any other contract. (5) Where the debtor pays what in law he is bound to pay and what he admits that he owes, such payment by the debtor and its acceptance by the creditor, even though tendered as payment in full of a larger indebtedness, do not operate as an accord and satisfaction of the entire indebtedness, because there is no consideration therefor. (6) Generally speaking, when a debtor sends to his creditor a check in an amount that the debtor is willing to pay, and at the same time informs the creditor that the debtor intends the check to be considered as full payment, then, by accepting and cashing the check, the creditor agrees to the settlement and cannot thereafter seek additional compensation.
The harvester was hired by the farmer to harvest his wheat crop. There was no agreement on the price to be paid. The harvester sent the farmer a bill. The farmer sent a check to the harvester, but for less than the harvester claimed was owed. The harvester cashed the check without noticing that the check read in fine print: "By endorsement this check when paid is accepted in full payment of the following account." The harvester brought an action against the farmer. The trial court dismissed the action based on accord and satisfaction.
Does cashing a check operate as a complete satisfaction of the contract price, even if the amount of the check is less than the amount of the bill and a cover letter did not mention the lower payment amount?
The court reversed and held that in order for there to have been an accord and satisfaction, there had to have been a meeting of the minds. The letter itself does not state that the check is sent in full payment and because there were no conditions attached to the acceptance of the check, the letter was not an offer of an accord. There was nothing on the check to indicate that the language was particularly applicable to the harvester's claim.