What is accord and satisfaction in invoice collection?

The doctrine applies specifically when a debt amount is genuinely disputed — not just when the debtor wishes to pay less. If a client sends a check marked 'payment in full' or 'final settlement' for less than the invoiced amount, cashing that check may constitute accord and satisfaction in many jurisdictions, binding you to the lesser amount. The creditor is considered to have accepted the settlement terms by the act of depositing the check.

The risk is highest in jurisdictions that follow the traditional common-law rule. Some states (including California and New York) have modified the rule: a creditor can cash a check marked 'payment in full' and still pursue the balance if they promptly notify the debtor in writing that they do not accept the check as full settlement. Check your state's version before depositing a suspicious check.

To protect against unintended accord and satisfaction: (1) never deposit a check that is visibly marked 'payment in full' on an undisputed invoice without researching your state's rule first; (2) if you decide to deposit it and want to preserve your claim, immediately send a written objection to the settlement; (3) consider returning the check and demanding a corrected payment. Keeping a paper trail of your objection is essential evidence if the debtor later claims the debt was settled. This is not legal advice — consult an attorney for disputes above a few thousand dollars.