Douglas Whaley
Law professor, gay rights advocate, atheist, heart transplant recipient, actor, novelist, bridge player, father, cat owner, storyteller. Much humor and, since the writer is a teacher, advice on many topics.
About Me
Douglas Whaley
Dublin, Ohio, United States
Retired from teaching commercial law subjects at Ohio State Law School in 2004 (though I have taught some classes since then). Went back to my three earlier loves: theater (acted or directed 15 shows since retiring), playing tournament bridge, and writing a series of novels. The first, available on Amazon.com (and Kindle), is an atheist thriller entitled “Imaginary Friend.” I am married,with one adult son from a prior marriage, who is himself married and living in Seattle.
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Monday, April 11, 2011
The Payment-In-Full Check: A Powerful Legal Maneuver
Having a dispute with a creditor? One way to win it (and fast) is to send that creditor a “payment in full” check [hereafter "PIFC"] and end it things in your favor. How does this bit of legal magic work? Read on.
It’s always been the law that if you and I have an existing contract, either one of us can propose a modification to that contract, and if we both agree, the contract changes accordingly. There are technical names for this. Say, for instance, that I owe you an undisputed amount of $500. I send you an email and ask if you would take my horse Dobbins is settlement of the debt, and you reply in the affirmative. My offer of something different than what was originally owed (the horse for the money) is called the offer of an “accord.” Your agreement to take Dobbins is the “satisfaction.” Thus an “accord and satisfaction” in our law is nothing more than a fancy name for a modification agreement. I no longer owe you $500; I owe you a horse. Only if I fail to deliver the horse can you choose to return to the monetary debt.
A “payment in full” check is an accord and satisfaction. To illustrate, let’s suppose we have a contract (no matter whether oral or written) and are in dispute as to whether one of us has broken that contract or, if uncertain (“unliquidated”) what amount is truly owed. I’m the party who owes the money, so I sit down and write you a letter explaining our disagreement, and enclosing a check for the amount I think I owe, marking both the letter and on the check as “payment in full” of my debt. This is the offer of an accord. If you cash that check satisfaction occurs. It’s all over.
The law here is codified as part of a much larger statute (in effect in all jurisdictions in the United States) called “The Uniform Commercial Code.” I’ve taught it for over 40 years. The important section is in Article 3 of the UCC, which I reprint, in relevant part, below. Let me walk you through it.
§ 3-311. ACCORD AND SATISFACTION BY USE OF INSTRUMENT
(a) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.
(b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim . . .
[Note: Oregon did not adopt this section and instead reaches the opposite result in this language:
“The negotiation of an instrument marked ‘paid in full,’ ‘payment in full,’ ‘full payment of a claim’ or words of similar meaning, or the negotiation of an instrument accompanied by a statement containing such words or words of similar meaning, does not establish an accord and satisfaction that binds the payee or prevents the collection of any remaining amount owed upon the underlying obligation unless the payee personally, or by an officer or employee with actual authority to settle claims, agrees in writing to accept the amount stated in the instrument as full payment of the obligation.”]
In the Official version of the statute quoted above, there are some interesting bells and whistles. One is that the accord and satisfaction won’t occur until the check clears. Another says that if your creditor has written on the bill or otherwise informed you that notices of a dispute must be sent to a particular office, you must send the PIFC there or it will not operate as an accord, nor trigger the modification (unless it happens to reach the right hands anyway).
Another complication has to do with this following difficulty.
Decades ago, I bought a new washer and dryer from Sears, and after I’d used the dryer a number of times it coughed up a lot of gunk which stopped up my basement drain and caused a minor mess. I brought in a plumber, who unstopped the drain, and told me the dryer was dumping detritus into the pipes where it caught and clogged. He advised me to buy a nylon stocking, put it on the end of the dryer hose, and clean it out once a week (which worked). I phoned Sears and asked what was going on, and the cheerful person on the other end of the phone told me it was their new “self-cleaning” feature, which worked by ejecting the gunk into the pipes. I told him it didn’t sound like a “feature,” but instead like a “breach of warranty” (I’d just started teaching law). He said, alas, he couldn’t help me. That same day I received Sears’s bill for the new machines, so I wrote out a PIFC, explaining in the covering letter what had happened and that I was deducting from my payment both the plumber’s bill and the cost of the stocking. I then received a reply from Sears saying they would refer my complaint to their Customer Relations Department, and would let me know how it came out. By this time they’d cashed the check, so I wrote another note to them telling them I already knew how it came out. I thanked them for their accord and satisfaction. To their credit, Sears gave up.
But, consider for a moment, just how hard it is for a bureaucracy like Sears to stop themselves from cashing checks. How fast they can do that and access the funds is what keeps them afloat. The use of a PIFC causes them no end of trouble. Professors White and Summers (two famous Commercial Law experts) once called the PIFC “an exquisite form of commercial torture.” The statute mentioned above therefore has an escape valve for creditors: if they return the amount of money represented by the check within 90 of receiving it, no accord and satisfaction occurs, and the debt is still in dispute.
Can the creditor just cross off the “payment in full” language, and, say, write “cashed under protect, all rights reserved”? Nope. There was some disagreement as to this legal issue once, but the statute has now clearly settled it . No matter what the creditor writes on the check, if the check is actually cashed, nothing more is due. Nor should the wise creditor keep the check too long. Another doctrine of the law says that where there is a duty to speak, silence is acceptance. I tell my law students that if they are representing a creditor who has received such a check, the only thing to do is send it back. However, doing that, so goes against human nature (“SEND THE CHECK BACK???“) I also tell my students (as I’m telling you now) that even if the other side isn’t expecting to receive a PIFC, go ahead and try it. Send them the check and just wait—see what happens. Really, it’s fascinating what often occurs. The creditor sees the check, his name is on the payee line, his attorney tells him sternly to send it back, and, by golly, he means to do that—but then his eyes swim, the room darkens, he passes out, and when he comes to the check has mysteriously been deposited in his bank account and is on its way to collection. This happens a lot.
Once last, very important thing. There’s a legal maxim saying “the law favors a compromise,” and that thought is the pedestal of a PIFC. But the statute quoted above begins by requiring both good faith and a bona fide dispute before the check is sent. It must be emphasized that a PIFC can only be used where both of those two factual things coalesce. A PIFC is not a blanket permission for misuse of the law. No matter how bad your current financial situation, you can’t just pay all your creditors half, and have a good month. If the person sending the PIFC is the bad guy, the debt will still be owed and a PIFC offers no relief.
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Related Posts:
“How To Respond to a Legal Threat,” March 29, 2014
“Women in My Law School Classroom,” January 8, 2011
“I Threaten To Sue Apple Over an iPad Cover,” April 8, 2011
“What Non-Lawyers Should Know About Warranties,” October 11, 2011
“How To Write and Effective Legal Threat Letter,” October 19, 2011
“Legal Terms You Should Know,” September 11, 2013
“A Guide to the Best of My Blog,” April 29, 2013
Posted by Douglas Whaley at 12:03 AM
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53 comments:
AnonymousJuly 11, 2012 at 6:48 AM
Does the U.C.C. apply to the Federal Government; i.e., Federal Student Loan debbts?
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Douglas WhaleyJuly 11, 2012 at 5:56 PM
Yes, it does. It is the law in all fifty states and D.C.
Douglas Whaley
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Grant HerrinApril 28, 2014 at 4:39 PM
Douglas, the statement that the UCC applies in all 50 states is inaccurate. Louisiana has adopted the majority of the UCC in Title Revised Statues in Title 10. However, many of the provisions of the UCC are inconsistent with our civilian doctrine and were either altered or omitted.
On the whole, the UCC is a proposed uniform code and not legally binding in each state as the provisions are subject to amendment in each state. Thus, I would caution against using certainties in regards to the UCC.
Douglas WhaleyMay 3, 2014 at 3:12 PM
I’m not aware of any states that made major changes to section 3-311. As far as I can tell Louisiana did not alter the official version in any way.
Douglas WhaleyMay 3, 2014 at 3:15 PM
Hmm. That’s wrong: Oregon doesn’t use the official text, but instead has this:
OREGON
Section provides:
“The negotiation of an instrument marked ‘paid in full,’ ‘payment in full,’ ‘full payment of a claim’ or words of similar meaning, or the negotiation of an instrument accompanied by a statement containing such words or words of similar meaning, does not establish an accord and satisfaction that binds the payee or prevents the collection of any remaining amount owed upon the underlying obligation unless the payee personally, or by an officer or employee with actual authority to settle claims, agrees in writing to accept the amount stated in the instrument as full payment of the obligation.”
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AnonymousDecember 28, 2012 at 12:54 PM
Do you see any issue with an Ohio bank accepting a check with the words “All Rights Reserved” on the reverse side above the payee’s endorsement.
Thanks
ajtlibcopies@aol.com
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Douglas WhaleyDecember 28, 2012 at 4:02 PM
From Douglas Whaley:
Responding to your question, the law is clear. Writing “all rights reserved” does not avoid the settlement of the dispute, which occurs when the bank cashes the check.
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AnonymousMay 2, 2013 at 3:18 PM
If I have a dispute regarding charges billed by my doctor, and have attempted repeatedly to speak to him regarding the issue and have not received a call, would a PIFC be warranted? I spoke to the office manager and the billing office regarding the situation, and keep getting the runaround on certain questions. They completely refuse to make any compromise. (It is a long complicated issue, but in a nutshell I feel that they breached the contract for ob care that I initially signed and are now overcharging me. I also saw a nutritionist in their practice who bills in 15 minute increments, and was overcharged for that as well, so I feel that I have been overcharged on multiple levels.)
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Douglas WhaleyMay 2, 2013 at 3:44 PM
I can’t give you specific legal advice without knowing more of the facts, but if this is a good faith dispute the Uniform Commercial Code allows the matter to be settled if you tender such a check, make it clear it’s meant as payment in full, and they cash it. At that moment it’s all over.
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AnonymousJune 21, 2013 at 9:08 PM
what dose make it clear mean dose writing in memo line count
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Douglas WhaleyJune 21, 2013 at 11:14 PM
Don’t write the payment in full language on the Memo line. That line is just for your own information, and is not meant to warn others. Put the payment in full on the back of the check and also on an accompanying letter so you can prove you warned the payee that cashing the check will result in the settlement of the debt.
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James McCannAugust 19, 2013 at 7:07 PM
I owe my landlord back rent of $x. If I wrote a check for $500 to him and wrote paid in full through the end of lease on the memo or back and he cashed or deposited it, would it hold up as a “paid in full” payment? Would he than have any legal action?
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Douglas WhaleyAugust 19, 2013 at 7:11 PM
I can’t give specific legal advice, but I can say that “payment in full language” won’t work unless there is a bona fide dispute over the amount owed, and the check is sent in good faith.
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James McCannAugust 19, 2013 at 8:42 PM
What kind of bona fide dispute? We have so many repairs that were promised to us and other misc maintenance that they have not repaired. Would that be considered a bona fide dispute? Would this be grounds for eviction?
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Douglas WhaleyAugust 20, 2013 at 10:36 AM
Once again, I cannot give you specific information since I’m not your lawyer. You need to talk to one; try calling Legal Aid if you cannot afford one. Good luck with this.
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AnonymousAugust 28, 2013 at 10:21 AM
So – I received a letter and a check from a client that states “by accepting and depositing this check you acknowledge the full and final satisfaction of amounts owing ….”
The check has on the For line: Full satisfaction of obligations per consulting agreement.
I do not agree with the payment given the client terminated the contract (after many years of working together, with no warning the dumped an entire team and hired an other).
Given that the check is just a small % of the contract amount I would like to send it back.
Now, it is unclear to me based on http://www.law.cornell.edu/ucc/3/3-311
if the fact that they did send the check clears them of responsibility or not.
Can they say – look, we offered to pay every cent up to the minute we fired them and that cleared us of all responsibility? Or will that be a problem in due diligence if they are to be acquired.
Thanks
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Douglas WhaleyAugust 28, 2013 at 10:27 AM
If the payee sends the check back, the dispute goes on. A payment in full check is an offer of settlement of the dispute. Returning it is an answer of “no.”
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AnonymousMarch 30, 2014 at 5:43 AM
But what if you cash it and then try to return it 3 months later.
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AnonymousSeptember 19, 2013 at 3:34 PM
I have an ongoing dispute with a cable television provider. Their rep promised to waive a full month’s bill for my trouble but when the next bill arrived, the charges were NOT waived. When I called to inquire, I was basically told to go pack sand. This has escalated to the point where I have switched to satellite television.
I intend to tender payment for what I owe for the services received before I encountered the problems. I want to send a PIFC but the bill says not to send correspondence with payment. Is sending the PIFC without an accompanying letter sufficient?
Also, the back of my check (and every other check I’ve ever seen) says DO NOT WRITE, STAMP, OR SIGN BELOW THIS LINE. Should I ignore that or should I write ‘payment in full’ in the endorsement area?
Thank you.
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Douglas WhaleySeptember 20, 2013 at 10:31 AM
I can’t give specific advice, but I can say that if a creditor has demanded that payment in full checks or any disputed checks must be sent to a particular office, then you must send the check to that office in order to trigger the payment in full rules described in this blog post. If the creditor did not name a specific place to send such checks, send it to the usual place even if they don’t want it sent there. The payment in full language should be written at the top of the back of the check in the box containing the language quoted above. That language does not prevent payment in full language being placed in the box containing the warning. The warning is meant to keep the rest of the check available for bank collection stamps, which will be added as the check moves through the collection system.
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AnonymousOctober 23, 2013 at 5:46 PM
Dear Mr. Whaley,
The cable television provider has cashed the check. I made sure to write ‘Paid in Full’ conspicuously on the front AND the back. They did not try to strike through it or anything like that – they simply cashed it. Now I have some follow up questions.
First, they never told me to send and disputed payments to a separate address so I sent it they way I normally would – with the payment stub in their pre-addressed envelope. Question – do they still get the grace period in which to return my payment, or are they stuck with the ‘accord and satisfaction’ ?
Second question. Assuming they do not attempt to return my payment, if they submit a derogatory remark on my credit report, might that be actionable under the Fair Credit Reporting Act?
Thank you.
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Roxanne CoffeltOctober 17, 2013 at 5:51 PM
I live in Indiana. In May (2013) I got a letter from an attorney’s office saying I owed them money. I called them, and they claimed it was for some medical bills from 2007. (Indiana has a 6 year statute of limitations.) They also claimed they were already suing me. And if I wanted details on the doctor bills I could send a self-addresed stamped envelope! About a week later I got served with the papers, so they weren’t lying about suing me. But they filed the lawsuit before they ever sent me the letter. It was going to be too difficult to research back six years, so iwth the court date coming up I just paid the original amount. But I wrote “in full payment” on the check, because the small claims suit was asking for court costs and interest at 8% for almost 6 years. I went to court and when I produced the cancelled check they cashed as evidence, the other attorney offered to refund my money so they could pursue the full amount. They claimed they had sent me a letter years ago, but I never got it. They had no proof they had ever sent me anything. The judge said he had to look something up and would send us his decision. Today I get a letter saying he found for the plaintiff and now I supposedly have to pay $215 in back interest, plus court costs, plus 8% interest from the judgement date. I am sooooo angry I want to appeal it. I think before I do I better go down and get a copy of that exhibit (the cancelled check) to prove I admitted it as evidence. Would you appeal?
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Douglas WhaleyOctober 17, 2013 at 5:55 PM
It would depend on the reason the judge found for the state. If he said there was no good faith dispute, then the appeal wouldn’t succeed. If he just ignored the statute, the appeal might be a good idea,but you’ll either need an attorney or have to do it pro se.
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Roxanne CoffeltOctober 17, 2013 at 10:39 PM
The judge didn’t give any reason at all for his decision, which I thought was really weird.
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Douglas WhaleyOctober 24, 2013 at 1:22 PM
If the creditor cashes the check there is still a 90 day period for returning the money and reviving the dispute. If the creditor does not return the money within that period, the debt is settled. Subsequent false reports about this to credit agencies would be defamation, and federal law requires the agencies to reinvestigate if the consumer complains and remove false information.
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AnonymousOctober 26, 2013 at 10:46 PM
Could the payment-in-full check maneuver be attempted for an ER/hospital bill?
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Douglas WhaleyOctober 27, 2013 at 10:38 AM
The PIF check can be used for any bona fide dispute where it is sent in good faith.
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AnonymousOctober 28, 2013 at 2:47 PM
My fiancee just got an emergency room bill for almost $5000. I don’t want to get into details, but after checking on https://healthcarebluebook.com/ it looks like they charged her about 5 times the amount the services normally bill for. We called them and told them we were willing to pay cash in the amount of $1,0000 which was reasonable (in the US). They said no. Would the PIF check strategy be something that would work in a situation like this if it was accompanied by a letter explaining our dispute?
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Douglas WhaleyOctober 28, 2013 at 3:20 PM
I can’t give specific advice, but the PIF check works anytime there is a bona fide dispute and the check is tendered in good faith, cashed, and the amount not refunded within 90 days.
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AnonymousOctober 31, 2013 at 4:15 PM
What if you don’t have a checking account?
Can you someone else write the check out of their account with the same result?
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Douglas WhaleyNovember 1, 2013 at 10:47 AM
As long as it’s clear that the payment is made on behalf of the person who owes the debt, there shouldn’t be any problem with the check coming from a source other than the debtor. Or the debtor could send a money order, though in that case the statute would apply only by analogy but the common law rule would reach the same result.
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Frank, slaninger@comcast.netNovember 16, 2013 at 6:26 PM
Do you have 1-2 common law state law cases supporting accord and satisfaction when the creditor contacted his attorney, and the attorney advised him to cross off “payment in full” and cash the check and sue for the amount not paid?
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Douglas WhaleyNovember 17, 2013 at 1:04 PM
All the cases agree that if the creditor first crosses off the PIF language and then cashes the check, the cited statute applies and the debt has been settled for the check’s amount, assuming the check was tendered in good faith and there was a bona fide dispute. See, for example, Wolfe v. Eagle Ridge Holding Co., 869 N.E.2d 521 (Ind. App. 2007). An attorney advising otherwise has committed malpractice.
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AnonymousJanuary 9, 2014 at 4:33 PM
I paid a hospital bill in Ohio…my bill was for $2,000.00. They had a patient discount (because I had no health insurance) of $800.00. I had my attorney send a check for $1,200.00 (which is what the bill stated). He wrote “payment in full” on the check. They now want me to pay the additional $800.00 even though they already cashed the $1,200.00 “payment in full” check…Do I have to pay it?
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AnonymousJanuary 9, 2014 at 4:34 PM
I paid a hospital bill in Ohio…my bill was for $2,000.00. They had a patient discount (because I had no health insurance) of $800.00. I had my attorney send a check for $1,200.00 (which is what the bill stated). He wrote “payment in full” on the check. They now want me to pay the additional $800.00 even though they already cashed the $1,200.00 “payment in full” check…Do I have to pay it? Thanks
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Douglas WhaleyJanuary 9, 2014 at 5:38 PM
I can’t give specific legal advice, but as explained in the above blog post, if there is a good faith dispute as to the amount, and the payee cashes a PIFC, the dispute is ended.
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AnonymousFebruary 15, 2014 at 6:30 PM
I paid for a contact lens fitting from an optometrist (mine retired) and I typically also go to an Ophthalmologist for Glaucoma suspect exam once per year. I had and paid for a contact lens fitting and then was given a redundant duplicative eye exam without my request nor understanding that the doctor was doing it. I thought the appointment I was asked to make was included in what I already paid for a contact lens fitting. I was going to stop by and pick up trial contact lenses (that were not in stock and had to be ordered) and the optometrist said I needed an appointment for that so she could look at them on my eyes before I left. I did schedule another appointment (for the lens trial fit) at the time of my contact lens fitting, but I did not ask for a more thorough annual exam since I already had that one with my regular ophthalmologist 6 months earlier. I had asked their optometrist what the cost would be for the next year’s exam, but I never asked for that redundant exam. I only said that I would like to know more about it. Then I got a bill for the exam that I didn’t want, need, nor did I ask for it!
My lawyer said to say “cashing this check indicates acceptance as payment in full.” Where and how do you write Payment in Full? Is it on the back where it would be endorsed, or on the front? I remember insurance payments in the past where the check stated this (I think on the back of the check – before the newer practice of limiting the area for endorsement). Do you agree? Should it be listed on the front or back?
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Douglas WhaleyFebruary 16, 2014 at 10:59 AM
The statute does not say where to write the PIF language, but it must be placed on the check. Do not put it on the front’s MEMO line, since that is a place where the creator of the check writes notes to him/herself as to what it’s about. I always put it on the top of the back in the indorsement area.
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AnonymousFebruary 26, 2014 at 10:42 PM
My creditor sent me a settlement letter for 297.00 on a 358.00 bill. I sent 100.00 and PIFC written in the memo line of my check. It was in collections and that is where i sent the money. Check was cashed and now it’s clinched on with a firm grip to my credit report and I can’t make any of the 3 bureaus remove it and the creditor calls me like clockwork. What can I do to make them go away? I think if they were not going to accept the payment they should have immediately sent the finds back. I work in Finance and we give back money all the time and sometimes for reasons such as this. Any option welcome…thank you.
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Douglas WhaleyFebruary 27, 2014 at 10:30 AM
I cannot give specific legal advice. If there was a bona fide dispute as to the amount due and the check was sent in good faith (questions of fact), a creditor who cashes the check has settled the debt. It is no longer due. Cite the creditor to the statute discussed in this post: Uniform Commercial Code section 3-311. It is the law of the land in all jurisdictions except New York, where the common law reaches the same result. A federal statute, the Fair Debt Collection Practices Act, allows you to notify a debt collection in writing that the debtor refuses to pay the debt, and the debt collector must thereafter stop contacting the debtor. See FDPCA section 1692c(c). There are significant penalties under the Act for violations; see section 1692k. A creditor who keeps harrassing a debtor when there is no debt due should be reported to the Federal Trade Commission and the state Attorney General Consumer Affairs, as well as the Better Business Association.
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AnonymousApril 8, 2014 at 8:27 AM
What if the person that cashed the check on behalf of the business, did not have the authority to settle the debt but had the authority to cash the restrictive check. For example, a loan servicer for a mortgage company receives a restrictive check and cashes it. Does accord and satisfaction apply to preclude the mortgage company, as it would if the loan servicer owned the debt?
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Douglas WhaleyApril 9, 2014 at 12:26 PM
Subsection (d) of the statute says that if the check is cashed by someone “having direct responsibility with respect to the disputed obligation” who knew it was tendered in full satisfaction, the dispute is settled. Thus the question will be whether the mortage servicer had such responsibility. If not, the check was still cashed and settles the debt unless the money is refunded within 90 days, as explained above. If so, there is no such grace period and the debt is over.
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vkgupta URSApril 17, 2014 at 7:16 PM
I am an individual building permit consultant. My contracts are small amounts ranging from $500 to $3000. In some case clients terminates the contracts and ask for the refund. Where as in my work 80% of the work is carried out in the starting of the contract. I need help in how to write a condition in my agreement saying that the contract amount is payable in full even the contract terminates or discontinuous.
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AnonymousApril 26, 2014 at 4:46 AM
I would simply write that 80% of the cost is due upfront before any work is started and that the balance is due in full upon completion of any work, and that payment must be made by money order or certified Bank check. And perhaps I would say that any checks with restrictive endorsements or any writing on the back of the instrument is an unacceptable form of payment.
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Douglas WhaleyApril 27, 2014 at 4:44 PM
I can’t approve specific language. I do note in the blog post above that cashing a check marked payment in full would settle the debt under statutory law, and this is probably true no matter what the original contract says. Were the law otherwise the statute would be too easily avoided, and it has always been true that the law favors a compromise when there is a dispute. Creditors getting a PIF check should send it back if they want to avoid a settlement. Cashing it doesn’t work no matter what conditions are attached to the act of cashing.
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AnonymousMay 10, 2014 at 12:02 AM
Thanks to your topic and following discussions, I was able to negotiate an Accord and Satisfaction. My question now is this: Is there a time frame that the company I negotiated with can resend their agreement?
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Douglas WhaleyMay 10, 2014 at 9:56 AM
As explained in the blog post above, if the recipient of the check cashes it, there is a 90 period in which to return the money and revive the dispute.
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Elvis StephensMay 30, 2014 at 6:04 AM
I wrote a check to my mortgage company with “Paid in Full” across the top of the check just to see if they would cash it, which they did. If this is acceptable in Alabama how do I now enforce this statute. I currently still paying them, does that imply that I still owe them?
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Douglas WhaleyMay 30, 2014 at 11:35 AM
Before a PIF check will work to settle the dispute there must first be a bona fide dispute as to the amount owed and the check that is sent must be a good faith estimate of the true amount totally owed. If you did that the statute would apply. But you can’t just send a PIF check for a partial amount when you know you really owe more because then there is no such dispute and you’re not in good faith.
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Christie PJune 5, 2014 at 12:33 PM
I have a $13k judgment against my ex-husband from our divorce. I had one car seized and sold at auction. I bought the car to resell it, and since the amount I paid only covered the constable’s fees and storage fees, it did not satisfy any of the judgment. My ex-husband wants to buy the car back and wrote me a check for $1k with a note on it “Judgment $1,000 + $3k mitsubishi = $4k”. After giving me the check, he sent me a text message stating that the check “sums to $4k. If you disagree then do not deposit. If u deposit then you acknowledge value of truck and past insure total to $4k. Remaining balance (of judgment) is $8k. I will pay out when I can.” My question is, if I cash this check does it operate as an accord and satisfaction of $4k of the $13k judgment?
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Douglas WhaleyJune 8, 2014 at 10:23 AM
I can’t give specific legal advice. Cashing a check anyone knows to be offered as a settlement will work an accord and satisfaction if it is offered in good faith and there is a dispute about what is owed. When in doubt the check should be returned by the payee.
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AnonymousJune 5, 2014 at 4:49 PM
How long is too long for a company to hold a PIF check before cashing or returning to sender and what should be done by sender after that amount of time.
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Douglas WhaleyJune 8, 2014 at 10:26 AM
The statute says nothing about what happens if the check is not cashed. In effect the dispute just goes on. Anyone who writes a check can stop payment on it by notifying his/her bank to do so, which is what is often done with outstanding checks that have not been cashed.
http://douglaswhaley.blogspot.com/2011/04/payment-in-full-check-powerful-legal.html