The Legal Effect of Writing “Paid in Full” on a Check

Writing “paid in full”on a check will not necessarily discharge one from the debt. It is sometimes shown on national news media and television judge shows that if one writes “paid in full” on a check that person has established accord and satisfaction that binds the endorser and prevents the collection of any remaining amount owed upon the original agreement. If that was always true no one would owe money and no one would lend it!

One can settle debts for a lower amount than the full amount due, but that is only through mutual agreement between the two parties. The debtor cannot unilaterally make the decision to decrease the amount owed to the creditor. If you feel overwhelmed with debt you should call your creditors, immediately. A creditor may be willing to work out a payment plan or agree to accept a lower amount. A creditor is sometimes eager to get back some of the money rather than get nothing at all.

There is a point of law in the Uniform Commercial Code, section 3-311 that states that a debt can be discharged with a check that states “paid in full” if there is a dispute about the debt, the debtor (the person that owes money) is in good faith (honesty and fair commercial standards) and the creditor accepts payment. If the creditor accepts and deposits the check, the creditor and debtor entered into a transaction known as “accord and satisfaction.” In order for the debtor to prove that there was accord and satisfaction, the debtor must show that the parties were in the process of offer and acceptance (“accord”), that this accord had been carried out (“a satisfaction”) which is supported by legal consideration (something of value). This means that one cannot get out of a debt by trying to trick a creditor into taking a smaller payment.

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