Accord and Satisfaction in California: When Accepting Partial Payment Ends the Claim

Last updated: November 2026

Accord and satisfaction is a California defense that ends a disputed debt when the creditor accepts less than it claims in full settlement. The most common version is a check marked payment in full. If the debt was genuinely disputed, the debtor tendered the check in good faith with a conspicuous full-satisfaction statement, and the creditor cashed it, the claim is usually discharged. A 90-day repayment exception applies. Kolmogorov Law, P.C. handles these disputes for creditors and debtors in Orange County, Los Angeles, and across California.

Call (909) 235-6116 or contact us online before you cash a disputed check, or if the other side claims you already settled.

What accord and satisfaction means

The Civil Code defines the two halves. An accord is an agreement to accept, in extinction of an obligation, something different from or less than what the person agreeing to accept is entitled to. (Civ. Code, § 1521.) Acceptance by the creditor of the consideration of an accord extinguishes the obligation, and is called satisfaction. (Civ. Code, § 1523.) Until the accord is fully executed, the original obligation survives. (Civ. Code, § 1522.)

In plain terms: the parties agree to settle a disputed claim for less than the full amount, and the payment is made. Both pieces are required.

Part performance, when the creditor expressly accepts it in writing in satisfaction, extinguishes the obligation even without new consideration. (Civ. Code, § 1524.) A signed settlement letter does the job. So does a written release. (Civ. Code, § 1541.) The hard cases are the ones where the only evidence is a check.

The "paid in full" check and Commercial Code section 3311

California has two statutes on full-payment checks, and they conflict. The Civil Code lets a creditor who receives such a check strike out the notation, cash the check as a partial payment, and keep its claim. (Civ. Code, § 1526, subd. (a).) The Commercial Code, enacted later, offers no such option. The courts that have faced the conflict hold that the Commercial Code controls because it is the later enactment. (Woolridge v. J.F.L. Electric, Inc. (2002) 96 Cal.App.4th Supp. 52 [117 Cal.Rptr.2d 771, 776].)

Under the Commercial Code, the debtor must prove three threshold facts. It tendered the check to the creditor in good faith as full satisfaction of the claim. The claim was unliquidated or subject to a bona fide dispute. And the creditor obtained payment. (Com. Code, § 3311, subd. (a).) The debtor must also prove that the check, or an accompanying written communication, contained a conspicuous statement that it was tendered as full satisfaction. (Com. Code, § 3311, subd. (b).)

Each element is a potential fight. A debt the debtor never disputed before sending the check is not subject to a bona fide dispute. A notation buried in the memo line in small type may not be conspicuous.

The exceptions that save a creditor

The statute gives the creditor two escapes.

The first is procedural. An organization may send the debtor, within a reasonable time before the tender, a conspicuous statement that communications about disputed debts, including full-satisfaction checks, must go to a designated person, office, or place. If the check was not received there, the claim is not discharged. (Com. Code, § 3311, subd. (c)(1).)

The second is the repayment window. A creditor that tenders repayment of the check amount within 90 days after payment undoes the discharge. (Com. Code, § 3311, subd. (c)(2).) That exception does not apply to an organization that sent the designated-office statement, which already has the first protection.

If the debtor proves that the creditor, or an agent with direct responsibility for the disputed obligation, knew within a reasonable time before collection that the check was tendered in full satisfaction, the claim is discharged regardless. (Com. Code, § 3311, subd. (d).)

How this comes up for business owners

A subcontractor invoices a general contractor for change orders the general disputes. The general sends a check for the undisputed base amount with "full and final payment of all amounts owed" typed on the face and a cover letter saying the same. The subcontractor's bookkeeper deposits it. Unless the subcontractor repays the amount within 90 days or had a designated-office statement in place, the change order claim is likely gone.

A vendor receives a check for about two-thirds of an invoice with "paid in full" in the memo line. The vendor writes "partial payment, balance due" on the back and deposits it. Under the Commercial Code, which controls, adding words is not a defense. The court in Woolridge added that even under the Civil Code the creditor had to strike the notation, not add to it. (Woolridge, supra, 96 Cal.App.4th Supp. 52 [117 Cal.Rptr.2d at p. 777, fn. 4].)

What a creditor should do with a disputed check

Do not deposit it reflexively. Read the check, the envelope, and the cover letter. If any of them says full satisfaction, treat the check as a settlement offer.

If you reject it, return the check with a short letter saying the tender is refused and the full balance remains due. If it was already deposited, tender repayment within 90 days, in writing, and keep proof. (Com. Code, § 3311, subd. (c)(2).) Then pursue the balance; our unpaid invoices page covers the next steps, and our prejudgment interest page explains what accrues on a liquidated balance.

What a debtor should do to make it stick

Make the dispute real and documented before the check goes out. Put the full-satisfaction language on the face of the check and in a cover letter, in plain and prominent words. Send it to the address or person the creditor designated for disputed-debt communications, if it designated one. Keep the cancelled check.

A debtor with a larger dispute is usually better served by a signed settlement agreement than by a check. Our page on enforcing settlement agreements explains how a written settlement can be enforced by motion.

What we do, and where these cases are heard

We advise creditors before they deposit, draft repayment tenders inside the 90-day window, and plead or defend the issue in litigation. Our defenses page covers the other defenses that travel with it. Cases are heard in the Orange County Superior Court's Central Justice Center in Santa Ana, the Los Angeles Superior Court's Stanley Mosk Courthouse, or the Central District of California where federal jurisdiction exists. See our breach of contract practice page for the broader practice.

What to bring to the first meeting

Bring the check (front and back), the envelope and any cover letter, and the invoices or contract showing the amount claimed. Add the correspondence showing whether and when the amount was disputed, your invoice terms, and the date of deposit.

Frequently asked questions

Does cashing a check marked "paid in full" settle the debt in California?

Often, yes. If the claim was unliquidated or subject to a bona fide dispute, the debtor tendered the check in good faith as full satisfaction, the check or an accompanying writing said so conspicuously, and you cashed it, the claim is discharged. (Com. Code, § 3311, subds. (a), (b).) You can undo it by repaying the amount within 90 days. (Com. Code, § 3311, subd. (c)(2).)

Can I cross out "payment in full" and cash the check?

Not safely. The Civil Code says a creditor who strikes the notation avoids an accord and satisfaction (Civ. Code, § 1526, subd. (a)), but courts have held that the later-enacted Commercial Code controls and offers no such option. (Woolridge v. J.F.L. Electric, Inc. (2002) 96 Cal.App.4th Supp. 52 [117 Cal.Rptr.2d 771, 776].) Return the check or repay it within 90 days instead.

What are the elements of accord and satisfaction?

A good-faith tender of an instrument as full satisfaction, a claim that was unliquidated or subject to a bona fide dispute, and payment obtained by the creditor. The instrument or an accompanying writing must also carry a conspicuous statement that it was tendered as full satisfaction. (Com. Code, § 3311, subds. (a), (b).) The debtor bears the burden of proving each.

What if the debt was never disputed?

Then there is no accord and satisfaction. The statute applies only where the amount was unliquidated or subject to a bona fide dispute. (Com. Code, § 3311, subd. (a)(2).) A debtor cannot create a dispute by writing "paid in full" on a check for an undisputed invoice. The creditor keeps the check as a partial payment and can sue for the balance.

Is accord and satisfaction an affirmative defense?

Yes. The debtor must plead it in the answer and prove the elements at trial. A creditor facing the defense should examine whether the dispute was genuine, whether the statement was conspicuous, whether the check went to a designated office, and whether repayment was tendered within 90 days. Any one of those can defeat it.

Talk to a California breach of contract attorney

If you are holding a disputed check, or the other side says a deposit ended your claim, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and represents businesses in Orange County, Los Angeles, and throughout California.

This page provides general information about California law and is not legal advice. Outcomes depend on the check, the correspondence, and the court.