Cashing a Full Satisfaction Check

Sometimes a buyer sends a check marked “Full Satisfaction,” or words to that effect. If a seller cashes the check, the seller will not be able to proceed against the buyer for the balance if there is a bona fide dispute. In these cases, there is an accord and satisfaction.

There are some exceptions. First, the check must be tendered in good faith. So, if a buyer routinely prints “full satisfaction” on its checks, regardless of whether there is a dispute, use of such a check would not work an accord and satisfaction because of a lack of good faith.

Second, the full satisfaction language must be conspicuous. This means it must be written so a reasonable person would notice it.

Third, if the full satisfaction check is cashed unintentionally, the seller can avoid an accord and satisfaction by tendering repayment of the amount to the buyer within 90 days after payment, which is the day the check is accepted. After the 90 days, the debt is discharged. If the buyer refuses to accept the repayment, the seller gets to keep the check without an accord and satisfaction.

Alternatively, a seller can send a written notice to the buyer that all communications, including checks, must be sent to a designated location. If the check is not sent to that location, but is cashed, there is not an accord and satisfaction.

These remedies allow businesses that process checks automatically, or use a lock box, to avoid an inadvertent accord and satisfaction.