An accord and satisfaction is a resulting new agreement arising from a bona fide dispute between the parties as to the terms of their original agreement. The mutual agreement to the new terms is the accord; performance of the accord is the satisfaction. The accord, although agreed to, is not a binding agreement until the satisfaction has been made. The original agreement is not discharged, therefore, until the performance or satisfaction has been provided as promised.
A general release is a document expressing the intent of a creditor to release a debtor from obligations on an existing and valid debt. A general release terminates a debt and excuses the debtor of any future payment without the usual requirement that consideration be given in return.
Occasionally, it becomes impossible to perform a contract. Conditions that arise subsequent to the making of a contract may either void the agreement or make it voidable by one of the parties. Discharge through impossibility of performance may, in some situations, be allowed only if the specific and anticipated impossibility has been made a condition to the agreement.
The performance of a promised act may be discharged by operation of law. Some law that causes the parties to be discharged from their obligations, such as bankruptcy or the statute of limitations, comes into play.
A discharge in bankruptcy from a court will be allowed as a defense against the collection of most, but not all, debts of the bankrupt. Therefore, most contractual obligations to pay money come to an end when a party files for bankruptcy.
Statutes providing time limits within which suits may be brought are known as statutes of limitations. The statute of limitations does not technically void the debt, but it gives the debtor a defense against any demand for collection.
When contractual obligations terminate by agreement or by operation of law, no liability falls to either party. When one of the parties fails to carry out the terms of a contract, a breach of contract occurs and liability falls to the party who has not done what was promised. Breach of contract comes from negligent or intentionally wrongful performance, expressed repudiation of contractual obligations, or an abandonment of performance sometimes after performance has begun. When there is a breach of contract, the injured party has the right to a remedy in court.
Wrongful performance or nonperformance discharges the other party from further obligation and permits that party to bring suit to rescind the contract or to recover money to compensate that party for any loss sustained. Such compensation is known as
