Paid in Full Check Endorsement (Accord and Satisfaction)

The law is unclear whether a check that states “payment in full” is considered to be binding. Prior to 2002, acceptance of a check with the words “payment in full” did not constitute an accord and satisfaction under California Civil Code section 1526, if the association protested by striking out or otherwise deleting that notation or accepted the check inadvertently or without knowledge of the notation. However, the California appellate case decided in 2002 Woolridge v. J.F.L. Electric, Inc., 96 Cal.App.4th Supp. 52 (2002) (“”Woolridge””), suggests that if you cash such a check, you will not be able to pursue the owner for any remaining balance. Specifically, Woolridge held that the Uniform Commercial Code Section 3311, which says “payment in full” is binding, applies to negotiable instruments (e.g., checks) and overrides the California Civil Code. Consult with your attorney on a case-by-case basis to determine whether cashing the check is worth the risk involved.

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