08/09/16 The Meaning of: Accord and Satisfaction; Compromise and Settlement

meaning accord satisfaction compromise settlement

The former appears usually in contractual contexts. Though the two phrases may overlap to some extent, compromise and settlement is used in the context of a dispute more probably giving rise to litigation. It applies to all disputes,, not just to those arising from contracts. The two substantive words in compromise and settlement are broader than those in accord and satisfaction, but compromise is roughly analogous to accord, and settlement to satisfaction.
An accord is an agreement to substitute for an existing debt or obligation some alternative form of discharging that debt; a satisfaction is the actual discharge of the debt by the substituted means. Stated otherwise, an accord is the agreement to perform (in an alternative way), and the satisfaction is the actual performance. Any claim (whether disputed, unliquidated, or undisputed and liquidated) may be discharged by an accord and satisfaction.

But only a disputed or unliquidated claim may be the basis for a compromise and settlement. Though the two words in this phrase have been used with a variety of meanings and even synonymously, at base compromise means “an agreement between two or more persons to settle matters in dispute between them;” settlement means “the performance of promises made in a compromise agreement.”