ContractsIntermediateAlabama Exam

Accord and satisfaction in contract law means:

ABoth parties have fully performed their obligations, as most licensees would generally expect

BThe parties agree to accept different performance than originally agreed to settle a disputeCorrect

CA court has ordered specific performance

DThe contract has been assigned to a third party

Why The parties agree to accept different performance than originally agreed to settle a dispute Is Correct

Answer B: The parties agree to accept different performance than originally agreed to settle a dispute

Accord and satisfaction occurs when the parties agree (accord) to accept different or lesser performance than originally contracted, and that new performance is completed (satisfaction), discharging the original obligation.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

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Key Terms to Know

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

Right of First Refusal

A contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

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