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Accord and Satisfaction

Accord and satisfaction refers to settling a debt without paying the full amount owed.  

It is a concept in contract law and works like this:

The son of a friend agrees to install a fence on your property.  The original amount agreed upon is $3,000, paid in two installments:  $1,500 to start and $1,500 upon completion of the fence.  Once the fence is finished you find it to be shoddily built and refuse to pay the second $1,500.   You and your friend's son come to a new agreement, one in which you both agree that you will pay him $500 instead of $1,500.  Thereby, a new contract is formed by the offer (you offer pay $500 instead of $1,500), the acceptance (the friend's son accepts the $500) and the consideration. The consideration is that for a $,1000 savings, the you give up that which you are entitled, a well built fence, and the friend's son gives up his right to the full price to avoid a lawsuit over inferior performance.   Accord refers to the settlement agreed upon by the parties, and the “satisfaction” is the performance of the settlement.