A tenant signs a two-year lease for an apartment. After six months, the tenant loses their job and can no longer afford the rent. The tenant informs the landlord and asks to be released from the lease. The landlord agrees to release the tenant from the remaining 18 months of the lease in exchange for a lump-sum payment of two months' rent. Both parties sign a new agreement reflecting this. What is the legal term for this new agreement?
- AModification
- BAccord and Satisfaction
- CNovation
- DRescission
Show answer & explanationAnswer & explanation
Correct answer: B. Accord and Satisfaction
An accord and satisfaction is an agreement (the 'accord') to accept a different performance (the lump-sum payment) in satisfaction of an existing contractual duty (the remaining 18 months of rent). Once the new performance is rendered (the payment is made), the original duty is discharged (the 'satisfaction'). This differs from modification (which changes original terms), rescission (which cancels the original contract entirely), or novation (which substitutes a new party or obligation).
Why the other options are wrong
- A. A modification changes the terms of the original contract. While this new agreement alters the original lease, the specific mechanism of accepting a substituted performance to discharge an existing duty is an accord and satisfaction.
- C. Novation involves replacing one of the original parties with a new party, or replacing the entire agreement with a new one involving all parties, which is not the primary focus here.
- D. Rescission is the cancellation of the original contract, restoring parties to their pre-contract positions. While the lease is terminated, it's done through a new agreement involving a substituted performance, not a simple undoing.
Accord and Satisfaction
An agreement in which a party agrees to accept a performance different from that originally promised in an existing contract (the 'accord'), and the subsequent performance of that agreement (the 'satisfaction') discharges the original duty.
- Requires an existing contractual duty.
- The accord is the new agreement to accept different performance.
- The satisfaction is the performance of the new agreement.
- Discharges the original contractual duty.
Memory trick: When the contract's journey ends, it's either fulfilled or excused.