1. Elements of an Accord
2. Substitute Contract
3. Agreement That Suspends Obligations
4. Accord and Satisfaction Basics
5. Accord and Satisfaction Benefits

The accord legal definition is an agreement between two parties that satisfies a contract dispute by discharging an original contract duty and providing an alternate performance of the agreement. The word accord is used as a synonym for the word treaty. This is often an agreement to drop criminal prosecution if another condition is satisfied.

Elements of an Accord

With an accord, the wronged party is restored property that another party wrongfully dispossessed in exchange for a promise to not pursue legal action. An accord agreement must be specific, and both parties must be privy to the contract.

An accord also occurs if one party agrees to accept a different obligation in place of the original obligation stated in the contract. An accord is considered executory if its obligations have not yet been performed.

For example, if one party promises to settle a debt to another party with real estate instead of cash as originally agreed to in the contract, this would be considered an accord. The accord is satisfied once the promised real estate has been transferred.

When an accord is satisfied, it discharges both the accord itself and the original agreement.

Substitute Contract

The executory accord is considered to substitute for the original contract. In the example above, once the accord is reached, the original agreement no longer exists. This means the person who accepted real estate to settle the debt can sue if that promise is not met. However, he or she cannot sue for the agreement to settle the debt with cash, since that contract was discharged by the accord and no longer exists. If the party changes his or her mind about accepting the real estate, the other party can sue for breach of contract to force him or her to do so.

Agreement That Suspends Obligations

If an executory accord sets out a promise to be fulfilled at a later date, the rights under the original contract are said to be suspended. Returning to the above example, suppose the original contract was set to be settled with cash on December 1. The executory contract establishes that this cash payment will be replaced with real estate to be delivered by December 31.

During December, the rights under the original contract are suspended. The party cannot sue for breach of contract unless the real estate is not delivered by December 31 as agreed. If this occurs, the breaching party can be sued for either the cash payment or the real estate in question, but not until January 1 or later.

Accord and Satisfaction Basics

While a contract modification automatically discharges a previously existing duty, an accord and satisfaction does not discharge the duty in question until the agreed-upon alternate contract performance is executed. Accord and satisfaction can be used for any implied or express contract.

An accord and satisfaction is also considered a legal contract and must contain all required contract elements, including:

Accord and satisfaction can also be used to satisfy breach of contract claims outside of court. This commonly occurs with the purchase of a release from debt or in debt negotiations when the original agreement is revised. This could include, for example, smaller but more frequent payments, a lower interest rate, a lower repayment amount, or another alternative arrangement.

However, in this situation, if the new terms are not met, the party is responsible for meeting the terms of the original agreement. That is because the previous contract was suspended but not replaced.

Accord and Satisfaction Benefits

This solution is favored because it is a compromise that benefits both parties if a situation arises in which the original contract terms cannot be upheld. In the case of a debt, for example, the creditor receives partial payment while the debtor receives partial relief. This could also occur if a homeowner is unsatisfied with renovations and agrees to make only a partial payment in exchange for subpar work. The contractor accepts the lower payment in exchange for an agreement that the homeowner will not sue. This accord replaces the original contract.

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