Legal Question in Business Law in Alaska

Re: acceptance of checks annotated 'paid in full'

I should add to my previous answer that the modern modifications to the traditional law adopted by some states may include, among others, the following:

(1) The creditor can undo the accord and satisfaction by refunding the amount paid by the "paid in full" check within a time period, say 90 days.

(2) A non-individual creditor can shield itself from "accidentally" accepting "paid in full" checks by inserting a provision in its credit agreement by requiring that "paid in full" checks be sent to a particular person at a special address, and not just to the mass-processing location (where the mail may be opened and processed by clerks who don't speak English). This suggests that you should read the fine print in your credit agreement to look for provisions affecting handling of disputes in general and accord and satisfaction in particular.

These are typical modern provisions limiting accord and satisfaction in some states, other states may have other limitations and some may still enforce the traditional law with few if any changes.

Re: acceptance of checks annotated 'paid in full'

First, a disclaimer: I am a California attorney and cannot render an opinion on the law of Alaska. State laws differ in most areas, including the effect of marking a check "paid in full."

Here is a synopsis of the law in typical jurisdictions. When a check is conspicuously identified as "payment in full for....." or words to that effect, either on the check or in an accompanying transmittal letter, and the payee accept the check and it clears, there has been an "accord and satisfaction," meaning the parties are deemed to have negotiated a disputed debt, agreed upon a compromise (the "accord"), and then to have carried it out by writing the check, depositing it and allowing it to clear (the "satisfaction").

Note that there is a requirement that the debt be the subject of a bona fide dispute as to amount. Very few states, if any, would recognize an attempted accord and satisfaction if the underlying debt were undisputed. Inability to pay, without more, does not constitute a "dispute" over the amount owed.

Some state legislatures and supreme courts have modified the common-law doctrine of accord and satisfaction, usually at the urging of credit card issuers, credit-granting merchants, etc. who have found the practice being abused, or because it is inconsistent with the realities of modern-day electronic commerce where no human eyes ever scan checks or electronic payments as they fly through the channels of commerce in huge volumes.

Finally, although the issuing bank in your case may be in Alaska, the law of Alaska is not necessarily applicable. Many contracts have forum-selection clauses (affecting jurisdiction) and/or choice-of-law clauses (affecting governing law). It is theoretically possible that you have a National Bank of Alaska Visa card, now live in California, and jurisdiction would be in Washington State, with New York banking law being applied by the Washington judge. Unlikely, but possible.