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TJD Architects v. Cervini’s Auto Designs

A-2946-08T1 (N.J. Super. App. Div. 2010) (Unpublished)

ACCORD AND SATISFACTION — In order to apply the principle of accord and satisfaction, there must be a finding that the party making the payment and the party receiving the payment both intended that acceptance of the payment would constitute full satisfaction of the obligation; therefore, a court must determine the intention of the recipient when it crosses out language such as “release of all claims” on the back of a check.

A property owner purchased a fabricated steel building for use in its business operations and paid a deposit. It hired an architect to design the “fit-out design” needed to make the building suitable for its purposes. After the architect completed the design work, it was discovered that the building would not support a proposed second floor. The architect and owner exchanged correspondence regarding proposed additional design work needed to add a second floor. The architect believed that the additional work was not contemplated by the original contract and that it was entitled to additional compensation. The architect billed the owner for the total work performed, including the additional design work.

The owner paid the balance owed for the original contract work but did not pay for the additional design work. The owner inserted a memo on the check stating “RELEASE OF ALL CLAIMS FOR FIT-OUT/CERVINI’S AUTO DESIGN.” The architect crossed out “RELEASE OF ALL CLAIMS,” added “No, See Letter Attached” and deposited the check. When the architect sued for the balance owed, the lower court granted the owner’s motion for summary judgment. It found that by depositing the check, even under protest, the architect was deemed to have accepted the payment in full satisfaction of any disputed claims arising out of the contract.

On appeal, the Appellate Division disagreed, noting that in order to apply the principle of accord and satisfaction, there must be a finding that the party making the payment and the party receiving the payment both intended that acceptance of the payment would constitute full satisfaction of the obligation. In this case, it could not be said that the architect intended to accept the owner’s check as the final payment for all services relating to the project. The issue at hand was identifying the disputed claim. According to the owner, payment was made for all services rendered by the architect, but the architect argued that the additional design work for the proposed second floor was not within the scope of services to be provided under the additional contract. In sum, the Court found that the architect, in crossing out “RELEASE OF ALL CLAIMS,” expressed its view that the check only satisfied the amount due under the original contract and did not intend for the payment to satisfy its claim for payment for the additional work.


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