Accord and Satisfaction - Issue 1

"(1) Subsections (2) to (4) apply if a person against whom a claim is asserted proves that all of the following conditions have been met:
(a) That person in good faith tendered an instrument to the claimant as full satisfaction of the claim.
(b) The amount of the claim was unliquidated or subject to a bona fide dispute. (c) The claimant obtained payment of the instrument.
(2) Unless sub. (3) applies, 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.
(3) Subject to sub. (4), a claim is not discharged under sub. (2) if any of the following applies:
(a) The claimant, if an organization, proves that all of the following conditions have been met:
1. Within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office or place.
2. The instrument or accompanying communication was not received by that designated person, office or place.
(b) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This paragraph does not apply if the claimant is an organization that sent a statement complying with par. (a) 1.
(4) 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. (403.311)"

An "accord and satisfaction" is an agreement to discharge an existing disputed claim. Flambeau Products Corporation v. Honeywell Information Systems, Inc., 341 N.W.2d 655, 664 (Wis. 1984). Proof of an accord and satisfaction requires evidence that: (1) a negotiable instrument was tendered to the creditor in full satisfaction of the claim; (2) the amount of the claim was unliquidated or subject to a bona fide dispute; (3) the creditor obtained payment of the instrument; and (4) the instrument or accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. Wis. Stat. § 403.311.

A tender may not constitute a successful accord and satisfaction, however, if either of two circumstances exist. First, the tender is not an accord and satisfaction if the negotiable instrument or accompanying communication is not received at the location where the creditor directed it be sent. Wis. Stat. § 403.311(a). The designated location may be a third-party processor, such as a bank. Basic Metals, Inc. v. Mahzel Metals, 705 N.W.2d 906 (Wis.App. 2005). Second, the tender is not an accord and satisfaction if the claimant must tender repayment of the amount of the instrument within 90 days of the tender of the instrument. Wis. Stat. § 403.311(b).

Section 403.311, Wis. Stats., adopts UCC § 3-311. Accord and satisfaction is an affirmative defense to settlements of disputed and unliquidated claims in Wisconsin. Karp v. Coolview of Wisconsin, Inc., 130 N.W.2d 790, 793 (Wis. 1964).