Accord & Satisfaction vs. Modification

Posted on

What is the difference between an accord and satisfaction and a modification?

We have received this question from some of our students recently, so we decided to write a quick blog post highlighting the difference between accord and satisfaction and modification on the bar exam.

Accord & Satisfaction - as the name indicates, there are two parts to an accord and satisfaction?(1) the accord and (2) the satisfaction.

  1. The Accord - the accord is the new agreement but it does not discharge the original agreement. It only suspends the right to enforce the original contract until the accord is satisfied (or breached).
  2. The Satisfaction - the satisfaction is the performance of the accord agreement.

Satisfaction of the accord agreement, discharges both the original contract and the accord contract. If, however, the accord is not satisfied, the non-breaching party may sue under either the original un-discharged agreement or for breach of the accord agreement (but obviously the non-breaching party cannot recover under both agreements-the plaintiff must choose one).

The key here is that an accord is conditional. If it is not satisfied, the original contract is not discharged. Not surprisingly, the bar examiners will indicate that a subsequent agreement is an accord by using conditional language (e.g. 'if-then').-

Modification - an ordinary contract modification (i.e. substituted agreement), on the other hand, is not conditional. A modification replaces the original agreement with a new agreement. If the new agreement is not satisfied, the non-breaching party may only sue under the new, modified contract (the original contract does not exist anymore).

So just remember that in an accord and satisfaction, the later agreement is conditional (i.e. 'if you do X, I will forget about the original contract'). Promising to do something else is not sufficient for excuse of performance by accord and satisfaction. The party must actually do it in order to discharge the original agreement.

If you have any questions or concerns about this topic, please do not hesitate to contact us at any time.

Updated on Aug 18, 2016