accord and satisfaction

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A device enabling one party to a contract to avoid an obligation that arises under the contract, provided that the other party agrees. The accord is the agreement by which the contractual obligation is discharged and the satisfaction is the consideration making the agreement legally operative. Such an agreement only discharges the contractual obligation if it is accompanied by consideration. For example, under a contract of sale the seller of goods may discharge the contractual obligation by delivering goods of different quality to that specified in the contract, provided there is agreement with the buyer (the accord) and a reduction in the contract price (the satisfaction) is offered. The seller has therefore ‘purchased’ release from the obligation. Accord and satisfaction refer to the discharge of an obligation arising under the law of tort.

Subjects: Accounting.

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