Is “Final Payment” Written on the Check?

Is “Final Payment” Written on the Check? Consider it Final and Paid.

In a recent Mississippi case, one general contractor argued that a payment it received from the owner did not satisfy the total claim amount. The check the general contractor received and subsequently deposited included the phrase “Final Payment.”

The general contractor attempted to recover the remaining balance owed and ultimately, the general contractor proceeded with suit to recover unpaid monies. Amidst litigation of additional issues, the court had to determine whether “Final Payment” written on the check operated as an accord-and-satisfaction of the claim.

Unfortunately for the general contractor, by depositing the “Final Payment” check, they accepted that payment as payment in full and were barred from further recovery.

What is Accord & Satisfaction?

Essentially, accord and satisfaction is synonymous with paid in full. According to the court opinion, Mississippi statute dictates that accord and satisfaction exists if:

  • Something of value is offered “in full satisfaction of a demand” – i.e. the check
  • The offer is “accompanied by acts and declarations [that] amount to a condition that if the thing is accepted, it is accepted in satisfaction” – i.e. the phrase “Final Payment” on the check
  • “The party offered the thing of value” must “understand that if he takes it, he takes subject to such conditions” –  i.e. understand the meaning of “Final Payment”
  • The party accepts the item and/or offer –  i.e. depositing the check

Based on the four parameters, as you can see, the court determined the payment the general contractor received, did qualify as accord and satisfaction.

“However, Mississippi law is clear that, despite whatever contentions a party may make to the contrary, cashing a check marked “final payment” constitutes an accord-and-satisfaction agreement, which precludes that party from bringing future claims for additional payment.”

But, But, But…Final Doesn’t Really Mean Final

This case was recently reviewed by attorney, Matthew Devries in “Paid in Full” Wives’ Tale True? When Endorsing A Check, Yes Ma’am!. In his review, Devries states “The contractor conceded that it cashed the check but argued that it repeatedly asserted to the owner…that it did not consider the “final payment” to be final and that it would continue seeking the remainder of what it was owed.”

For whatever reason, it reminds me of the cliché, “You can’t have your cake and eat it too.” The contractor can’t cash a check, marked as final payment, and then continue collection efforts. Perhaps it’s that pesky word “final” that was getting in the way.

Be Careful!

Checks are monetary agreements and should be treated with care. As a former bank employee, I can tell you there are guidelines for accepting & depositing checks (albeit, they may not always be enforced or followed).

For example, the payee line on the check must match the deposit account name, if you write “for deposit only” on the check you can’t get cash back from the deposit (must be a separate transaction), and post-dated checks can’t be tendered until the specified date.

If you receive payment, and there are conditions or terms within the payment, seek a legal opinion before accepting the payment.

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