If Company A does not provide the new conditions for any reason, it may be held responsible for the original contract because it did not meet the terms of the agreement. Agreement and satisfaction are not a substitute for the original contract; on the contrary, it suspends the ability to execute this contract, as long as the terms of the contract are met as agreed. Another example would be that a lender agrees to borrow $100,000 at an interest rate of 5.0% for 30 years, and the loan documents are all established for a loan at an interest rate of 6.0%. If the lender agrees to reduce the purchase costs by an additional $1,000 and borrowers agree, there has been convergence and satisfaction. If borrowers later complain of a breach of contract, the transaction (offer and acceptance of the USD 1000) is a match and satisfaction and constitutes a valid defense of the borrower`s action. If a party (a person or business) has harmed or caused potential harm to another party (against a person or business), it may fear that the second person may be able to take legal action for that injury or fault. In order to proactively protect themselves against these possible legal actions, they would try to use an unlocking agreement to essentially compensate this second person, so as never to pursue this action. The lender must complete the document and then sign the bottom of the form to finalize the release. The borrower and lender must keep a copy of this form in order to obtain registration of the release of another liability pursuant to the original debt title. In addition, a right is discharged when the person against whom the claim is invoked proves that the applicant or a representative of the applicant, directly responsible for the undertaking at issue, knew, within a reasonable time before the forfeiture of the act, that the act had been offered in full satisfaction with the claim. And of course, the ubiquitous „full payment“ written on partial payment cheques is a permanent source of litigation, as creditors and debtors argue over whether there has been agreement and satisfaction.
The law of the state concerned regulates these issues (often the UCC, if between traders) and the creditor or wise debtor will learn the special law before such a cheque is issued or cashed. Agreement and satisfaction are the payment of unseated debt. For example, a contractor is responsible for building a garage for an owner for 35,000 $US. The contract required $17,500 prior to construction, us$10,000 in various construction phases and a final payment of $7,500 at completion. Once completed, the owner of the house complained of a lower quality of work and refused to make the final payment. After a mutual agreement, the owner accepted $4000 as a full payment. A new contract was created through offer, acceptance and consideration. The idea is that for a saving of $3,500, the owner abandons what is rightfully his, a well-built garage. The owner gives up his right at full price to avoid the suit for a lower performance. If the agreement and satisfaction have arrived, the owner has waived his right to bring a lower-quality action, and the owner has waived his right to sue for the full $7,500, which is due under the original contract.