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What to Do With That Check Marked Paid In Full

By Patrick Barthet

You are finally getting to the end of that large remodeling project. The wood decking is done, the replacement siding is in and the new kitchen appliances delivered. So you tally up those few remaining change orders and submit your last payment application. But to your surprise, you hear from the owner that she doesn’t totally agree with your claim for extras. You explain that the scope of the contracted work increased with some of the changes requested by the owner but she just isn’t seeing it your way. You then receive a check in the mail for a significant portion of what you are owed but it is less than the amount you had invoiced. The check is marked “Payment in Full” in the memo line on the front of the check and is enclosed with a letter from the homeowner explaining her position and disputing your claim for some of the extras. She insists that the check represents full payment for your work. You wonder – should you cash the check, and if you do, will you still be able to make a claim for the unpaid balance? Unfortunately, in many states, the answer is no.

Cashing a check with any form of full payment designation such as payment in full, final payment, paid in full or full settlement, especially when that check is accompanied by a letter or note explaining why the check is to constitute full payment, is generally interpreted by many courts as a complete discharge of a given obligation. It is considered an accord and satisfaction – legal terminology meaning the parties have reached an agreement to resolve their pending difference.

It can make a difference where the paid in full notation is found. When simply written at the bottom of the check, more as a reference or reminder to the issuer, it is less likely to be legally enforceable. However, when placed on the back of the check, above the endorsement line, then it becomes a more effective notice since the person receiving the check would be signing directly under the notation. Endorsing and cashing such a check is more likely to be accepted by a judge as an accord and satisfaction of the disputed sum.  Of course, if the paid in full check is received with a letter explaining the owner’s belief that this is all that is rightly due, then you will really

Source: http://feedproxy.google.com/~r/lienzone/~3/Qhc54T715KI/

  

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