In many landlord-tenant disputes, the issue of accord and satisfaction may be raised by the tenant as a way of being relieved of the terms of the lease. This is particularly true when the tenant has either fallen behind with the lease payments or is in some way dissatisfied with the premises. When trying to get out of the lease a tenant may submit a check to the landlord for an amount less than is owed with language on the check stating “this check is payment in full and in full and final satisfaction of all claims.” What the tenant may be attempting is called an “accord and satisfaction.” This article explains the issues surrounding accord and satisfaction under Mississippi law.
Accord and satisfaction is an informal method of dispute resolution. An “accord and satisfaction” is an assertion that a dispute has been settled and that full performance under the settlement agreement has been made. It usually presupposes the existence of a prior contract and a legitimate dispute over the amount owed. The “accord” is the settlement agreed upon by the parties, while the “satisfaction” is performance of the settlement. Unlike a setoff, an accord and satisfaction is a contract, which must include the elements of offer, acceptance and consideration. If a party has made a payment which is claimed to be in full settlement of the disputed amount, then accord and satisfaction can be used as an affirmative defense in any subsequent action.
Under Mississippi law, in order to establish the defense of accord and satisfaction a debtor has to prove four elements: 1. Something of value offered in full satisfaction of demand; 2. Accompanied by acts and declaration as amount to a condition that if the thing offered is accepted, it is accepted in satisfaction; 3. The party offering the thing of value is bound to understand that if he takes it, he takes subject to such conditions; and 4. The party actually does accept the item. Lovorn v. Iron Woods Products Corp., 362 So.2d 196, 197 (Miss.1978).
Put differently, if a tenant tenders a check to a landlord “in full satisfaction of amounts owed” there must be language on the check (or accompanying documentation) indicating the agreed upon amount; that acceptance of the agreement and payment finalizes the same; the landlord understands the agreement and actually does accept the payment. A landlord should not accept any payment instrument if he does not agree with the amount and has not agree that it is a full and final payment of amounts owed.
As a protection against possible accord and satisfaction defenses, I advise rental property owners to include a provision in the lease addressing surrender and acceptance of the property. The provision reads that no action of the landlord or its agents during the lease term shall be “deemed an acceptance of a surrender of the Demise[d] Premises, and no agreement to accept a surrender of the Demised Premises shall be valid unless the same be made in writing and subscribed to by the Landlord.” The “Surrender” provision protects the property owner from being held to an accord and satisfaction agreement.
In conclusion, in order to have an accord and satisfaction there must be accompanying language that the check is being tendered as full and final payment and a full understanding by the landlord that acceptance of the check finalizes the agreement. Verbal accord and satisfaction agreements are typically not upheld when the matter reaches the litigation stage. From a tenant’s point of view, comprehensive language accompanying the payment strengthens his accord and satisfaction defense.
