Under the principle of accord and satisfaction, a　debt is deemed to be discharged　if a debtor tenders a check to a creditor clearly offered as payment in full for a known disputed claim, and that check is cashed by the creditor. The purpose behind this general rule is to protect the good faith expectations of a debtor who makes payment to a creditor on the condition that it will be accepted as payment in full for the debt owed. In addition, this rule of law is thought to promote the resolution of disputes between creditors and debtors informally and without litigation. Accordingly, accord and satisfaction constitutes a defense to a legal claim for money after a debtor has tendered a check as full payment. 　

Creditors should be aware of this legal principle in the event a debtor makes payment in an amount less than the full amount owed with the intent to satisfy the entire debt. For example, suppose a creditor sends a bill to a debtor stating that the amount due to the creditor is $10,000.00. The debtor sends a letter to the creditor disputing the amount due, along with a check to the creditor in the amount of $7,000.00 marked as "payment in full." The creditor cashes the check. Under the general rule described above, the payment of $7,000.00 has satisfied the full amount due, and the total debt is discharged.

The Wisconsin Statutes provide important requirements for accord and satisfaction by use of an instrument. Under Wisconsin Statute § 403.311, the debtor must prove that three conditions have been met in order to assert accord and satisfaction as a defense to a legal claim by the creditor. First, the debtor must have tendered the check to the creditor in good faith, meaning that the debtor is not trying to "sneak one past" the creditor and instead sincerely intends to make the creditor aware of the attempt to settle the matter for a lesser amount. Second, the amount of the claim or debt must have been subject to a known bona fide dispute. And third, the creditor must have accepted payment of the instrument; that is cashed the check.

Returning to the previous example, the statute’s "good faith" and "known bona fide dispute" conditions appear to have been met by the letter that accompanied the debtor’s payment, assuming the debtor had a colorable basis for the dispute. Therefore, the creditor’s receipt and acceptance of the payment with that knowledge meets the third requirement of the statute and an accord and satisfaction appears to have occurred.

Fortunately, the statutes provide another safeguard for creditors. Even if the debtor meets all three of the requirements above, the creditor still has the ability to tender repayment of the check to avoid discharge of the entire debt. Under §403.311(3), a debt is not discharged if the creditor tenders repayment within 90 days after the intended full payment was made by the debtor. Therefore, even if a debtor attempts to make full payment in good faith, for a debt that is subject to a known bona fide dispute, and the creditor has accepted payment, the creditor still has the ability to avoid discharge of the debt by tendering repayment of the debt within 90 days. In the example above, the debt will not be discharged if the creditor tenders repayment of the $7,000.00 within 90 days of cashing the check.　

It is important for creditors to be aware of both the general principle of accord and satisfaction and the Wisconsin statutory law described above, in the event a debtor attempts to make full payment on a debt in an amount less than that which is due. Creditors, especially large creditors, often receive a significant number of payments from debtors in any given time period. Nonetheless, all creditors should be on the lookout for tender of payment by debtors intended as payment in full when processing payments. If a creditor does cash such a check from a debtor, the creditor also needs to be aware safeguards provided under the statutes, including the provision allowing the creditor to tender repayment within 90 days to avoid discharge of a debt.