Accord and Satisfaction

"If a person against whom a claim is asserted proves that that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, that the amount of the claim was unliquidated or subject to a bona fide dispute, and that the claimant obtained payment of the instrument, all the following apply:

(A) The claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.

(B) A claim is not discharged if (1) a claimant organization, if an organization, proves that the instrument was tendered to the claimant within a reasonable amount of time; the claimant sent a conspicuous statement to the person that communications concerning disputed debts are to be sent to a designated person, office, or place, and the instrument or accompanying communication was not received by that designated person, office, or place; or (2) The claimant, whether or not an organization, proves that within ninety days after payment of the instrument, the claimant tendered repayment, with limited exceptions.

(C) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim. ORC § 1303.40"

An accord is a contract between a debtor and creditor where the claim is settled for a sum other than the amount allegedly due while satisfaction is the performance of that contract. Allen v. R.G. Indus. Supply, 66 Ohio St.3d 229, 231, 1993-Ohio-43, 611 N.E.2d 794 (1993) There are four elements that must be present to have an accord and satisfaction: (1) proper subject matter; (2) competent parties; (3) mutual assent, and (4) consideration. Coburn v. Auto-Owners Ins. Co. , 189 Ohio App. 3d 322, 334, 2010-Ohio-3327, 938 N.E.2d 400, 26 (10th Dist.). Additionally, two safeguards are built into the doctrine of accord and satisfaction to protect creditors from overreaching debtors: (1) the parties must have a good-faith dispute about the debt and (2) the creditor must be given reasonable notice that the payment was intended as full satisfaction of the alleged debt. >Id. The negotiation of a check accompanied by reasonable notice that it has been offered as full payment for a disputed debt gives rise to accord and satisfaction. ORC 1303.40; Dawson v. Anderson , 121 Ohio App.3d 9, 14, 698 N.E.2d 1014 (10th Dist. 1997). One who receives a check marked as payment in full may either accept the check upon the conditions set by the debtor or reject the check. Inger Interiors v. Peralta 30 Ohio App.3d 94, 506 N.E.2d 1199 (8th Dist. 1986). Furthermore, a creditor may elect to reserve its rights by endorsing the check ; so as to give the debtor notice that the check was not accepted as full payment on the debt. AFC Interiors v. DiCello , 46 Ohio St.3d 1, 6, 544 N.E.2d 869 (1989)."