"Payment in Full" and "Under Protest"

Parties will often try to informally resolve disputes outside of court to avoid litigation, with or without an attorney. One of the chief aims of settlement is to make sure that it is a “walk away” settlement; in other words, that there is a general release of all claims which precludes any party from coming back some time in the future and filing suit on the same set of facts.

While a general release is often preferable because it provides more clear language, sometimes delivering a check stating that it is a settlement of all claims is acceptable. Specifically, under that scenario, the check (assuming it is accepted and endorsed) may be considered an accord and satisfaction. See Helton Const. Co., Inc. v. Thrift, 865 S.W.2d 419, 424 (Mo. Ct. App. 1993) (“Missouri law is in agreement that where a claim is unliquidated or in dispute, where a check has been tendered on the express condition that acceptance thereof shall be deemed to be satisfaction in full, and where the payee cashes the check, an accord and satisfaction results even though the conditional language on the check has been struck out or modified”). Therefore, even if the check is endorsed and the language stating that it is satisfaction in full or a general release is either crossed out or accompanied by the statement that it is accepted “under protest” or “with reservation of rights,” an accord and satisfaction may still apply.

For a long period of time, there was confusion in Missouri about whether  § 400.1-207 — which allows acceptance of payment without reservation of rights — applied to an accord and satisfaction. However, the statute was later amended to expressly state that it does not apply to accord and satisfaction.

As such, one needs to exercise extreme caution when a check is received stating that it is a general release or in satisfaction of all claims. If it is endorsed, you may very well be waiving and releasing any and all claims for the amount of the check. Contact us with questions.