California First-Year Law Students' Exam (Baby Bar) — MCContractsMedium
A tenant signs a two-year lease for an apartment. After six months, the tenant loses their job and informs the landlord they can no longer pay rent. The landlord and tenant then agree that the tenant will pay a reduced rent for the next three months, and in exchange, the landlord will not pursue back rent or evict the tenant. This new agreement is legally binding. This scenario is an example of which of the following?
- AA novation.
- BA modification of the original contract.
- CA unilateral contract.
- DAn accord and satisfaction.
Show answer & explanationAnswer & explanation
Correct answer: D. An accord and satisfaction.
An accord and satisfaction occurs when parties agree to accept a different performance (the accord) in satisfaction of an existing contractual duty, and then that different performance is completed (the satisfaction). Here, the agreement to accept reduced rent in lieu of full original rent is the accord, and the payment of the reduced rent is the satisfaction.
Why the other options are wrong
- A. Novation involves replacing an old contract with a new one or substituting a new party, neither of which fully describes this scenario.
- B. While it is a modification, 'accord and satisfaction' is the more specific and accurate legal term for this type of modification that discharges a prior duty.
- C. A unilateral contract involves an offer that can only be accepted by performance, which does not fit this bilateral agreement to alter existing duties.
Accord and Satisfaction
An agreement by two parties to a contract to accept a different performance in satisfaction of the original performance obligation, followed by the actual performance of that new agreement.
- Accord is the new agreement.
- Satisfaction is the performance of the new agreement.
- Discharges the original contractual duty.
Memory trick: Accord and Satisfaction: It's like saying 'Okay, instead of that, let's do this,' and then actually doing 'this.'