Friday, March 26, 2010
Cashing a check that says "Payment in Full"
Dear Rich: I'm having a dispute with a company for which I did a website. The contract says that they owe me $350. They claim I didn't do part of the work. Then, they sent me a check for $250 that says "Payment in full for website." Is it true that if I crossed out the "payment in full" and wrote "under protest," I could deposit the check and still go after the other $100? Court rulings are not always consistent on this, but the majority of courts say - and the U.C.C., as well - that if there is a dispute as to what is owed, and the party receiving the check knows that it's intended as 'payment in full,' depositing the check ends the dispute (known as "accord and satisfaction"). The rule doesn't apply if there is no dispute (in which case the 'payment in full' is meaningless) or if the dispute is not "honest"-- for example, one party deceives the other making it difficult to figure out what's owed. Finally, if there is a dispute but the check is cashed inadvertently, the rule may not apply (courts are split on that issue). If you have deposited the check and wish that you hadn't, the Dear Rich Staff advises that most state statutes -- check your state's U.C.C. (Section 3-311) -- give you 90 days to repay the check and get back into the dispute.