Sam Student borrowed $1K from his cousin. Sam and the cousin became involved in

Question

Sam Student borrowed $1K from his cousin. Sam and the cousin became involved in a heated disagreement when the cousin began to press Sam for repayment of the loan. Finally, Sam wrote a check for $190 to the cousin and conspicuously wrote on the check in big letters that it was full and final payment for the $1K loan. In need of money, the cousin cashed the check and demanded the remaining $810 from Sam. Sam refused to pay, claiming that they had entered into an accord and satisfaction that discharged Sam's obligation to pay anything more.

• The cousin sued Sam. Discuss the probably outcome.

Explanation / Answer

The cousin will clearly win the lawsuit. For an accord and satisfaction to apply, there must be a good faith dispute between the parties and an agreement to settle the dispute. In this case, there is no good faith dispute that Sam owes his cousin the remaining $810.

The cousin wins. There is no accord and satisfaction without a good faith dispute as to the amount owed. Here, the borrower's only reason for paying less than the total debt was inability to pay the total sum. There was no prior agreement, no dispute - no accord

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