Legal Factoid...Legal Factoid...
G. Bradley Hargrave, Esq.
A person accepting a check as payment of a debt should verify whether any words of limitation, such as "full satisfaction" or "payment in full," appear on the face of the check. While the effect of this language varies from state to state, the creditor should be aware of a few legal principles.
If a check labeled "payment in full" is drawn for an amount less than an undisputed debt, the creditor may deposit the check without compromising his right to collect the balance. However, if the debt is disputed, depositing such a check may compromise the claim (an "accord and satisfaction"), particularly if the words of limitation are conspicuously noted on the check or a separate writing.
A minority of states allow the creditor to deposit the check "under protest" or with a "reservation of rights," thus permitting additional collection. Although it would appear that the Uniform Commercial Code permits this result, a majority of jurisdictions continue to adhere to the general rule above. The safest creditor response, short of contacting an attorney in your state, is to return the check to the debtor along with a statement of the total amount due. While it is understandable that parting with money in hand may be a difficult decision, this is the safest means of protecting one's right to enforce payment of the balance.
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