Make Sure Final Payment You Accept Is All You Plan to Get

The legal doctrine of "accord and satisfaction" is triggered when two parties agree to accept a stipulated performance to settle a dispute. The agreement is known as the "accord" and the performance of the agreed-upon terms is known as the "satisfaction."

In the construction context, accord and satisfaction often arises when a contractor offers a final payment to a subcontractor for less than the subcontractor claims is owed. If the contractor clearly and conspicuously declares (either in a letter or even on the check itself) that the reduced payment constitutes "final payment," the subcontractor has only two options: accept the reduced payment in final satisfaction of the debt, or refuse the reduced payment and reserve the right to pursue the full debt.

The case

In the case of Gelles & Sons General Contracting Inc. v. Jeffrey Stack Inc., 264 Va. 285 (2002), a contractor and subcontractor disputed the amount owed the subcontractor for final payment. When the subcontractor cashed the contractor's "final payment" for less than the amount it claimed to be owed, the subcontractor was barred from seeking any additional amounts.