If you write Account paid in full on a check doesn't the creditor accept this amount when signing and cashing?

Answer

No. That's a myth that has been around "forever". It has no affect whatsoever, unless the check is actually written for the full amount that is owed the creditor.

Section 3-311 of the Uniform Commercial Code does state that a debt can be discharged with a check designated as payment in full "if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim." However, it's up to the claimant to prove "that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim." So if you receive a check marked "paid in full" made out for less than the amount you have agreed upon, you'd best not cross out the words "paid in full" or write "disputed" on it and cash it anyway, as you risk having the entire debt discharged. However, this condition does not apply to "transactions conducted or performed, in whole or in part, by electronic means or electronic records, in which the acts or records of one or both parties are not reviewed by an individual in the ordinary course [of business]," which means that this scheme will not work at all for most bill or credit card payments, as those payments are typically handled by automated systems and not humans.

Answer

The correct answer will different depending on the state. A state-by-state analysis is impossible here. There is pre-UCC case law and statutory law in many states that may still be operant, and it might cause the court to reach a different result than the UCC. The version of UCC 3-311 that is enacted in any particular state typically requires as a threshold issue a bona fide dispute over the amount due and owing, and further it may or may not allow for an accord & satisfaction check to be effective without a meeting of the minds or review by a live human being. If it may be effective without a meeting of the minds, the recipient typically has a 90 day period in which to send the check back. Presumably the debtor would have informed the creditor during the 90 days that the creditor had received an accord & satisfaction check, but a crafty debtor could stay quiet and achieve tactical surprise. Nonetheless, if the accord & satisfaction check is not for the undisputed portion of the claimed balance based on that dispute, a court would undoubtedly find that a reason to disregard it and find it ineffective to satisfy the creditor's claim. The version of 3-311 that does not require a meeting of the minds or live human review does allow the creditor to contractually designate a separate address for accord & satisfaction checks. If the regular payment address is used, the accord & satisfaction notation is ineffective.

So you need to know whether UCC 3-311 is enacted in your state, which version is enacted, what the contract says and what your state's pre-UCC statutes and case law look like before using an accord & satisfaction check. For UCC purposes, you must also have a real, substantial dispute, not simply be seeking a discount ... if you're just seeking a discount you must depend on non-UCC law, which may or may not help you.

First answer by Nikki. Last edit by Flacorps. Contributor trust: 8 [recommend contributor]. Question popularity: 44 [recommend question]

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Paid in full on a check? Paid in full written on check? When is a collection considered old? If you write Account paid in full on a check? Is it legally binding to write paid in full on a check? Does a creditor have to accept a change in address form? Does paid in full written on a check pay the account in full? What happens to the balance of your debet if you write paid in full on the check? If the word paid in full is written on the memo line of check is that a contract? If you write a check out to a collection company for the dollar amount you can afford and also state paid in full if they cash it would that debt be considered setteled? Can your dentist bill you for additional charges after cashing your check which stated on it account paid in full? If you write paid in full on a check to a creditor can they still try to bill you later?