Novation, Accord and Satisfaction, and Substituted Contracts

Summary

This practice note addresses the discharge of contractual duties by novation, accord and satisfaction (including using full-payment checks under Section 3-311 of the Uniform Commercial Code (UCC)), and substituted contracts. Such methods are commonly used by parties to a contract to alter and discharge contractual rights and obligations and to settle disagreements informally, without having to resort to more time-consuming and costly dispute resolution procedures such as litigation, mediation, or arbitration. Discharging contractual duties using releases, rescissions, and agreements not to sue, along with the theories of illegal or voidable contracts, are beyond the scope of this practice note.