Legal Question in Business Law in California

depositing a check noting ''payment in full''for less than agreed.

Is my customer legally excused from a balance due us if we deposited his check for less than agreed and he wrote ''payment of invoice #1234 in full'' on it? His signed purchase order to us is for $25,000. Our invoice was for $25,000. He sent a check to our p.o. box for $22,000 marked ''payment in full of invoice # 1234'' Our secretary ignored the notation and deposited the check. Now he won't pay us the balance and we are suing him in Small Claims court for the balance. We did have a dispute over the $3000 and NEVER agreed to allow his deduction. Our contract with him is in writing and our dispute is documented with written fax copies. We are confident that the reason he made this deduction will not stand up but we are not sure about the issue of depositing his check. We need to know what to expect in small claims court. Please advise.

Thanks.


Asked on 10/31/00, 9:49 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: depositing a check noting ''payment in full''for less than agreed.

Your customer is attempting to force an "accord and satisfaction" on you. The situation seems to be covered by California Commercial Code section 3311. Since a full answer would be lengthy, I will only recommend that you obtain and read an annotated version of the Code section to get the flavor of its provisions and the policy underlying them.

In general, you are more likely to win if there was no bona fide dispute as to the amount owed. Your question suggests that there may have been a dispute, but was the other party acting in good faith? Those are the issues.

If after reading the Code and the comments and annotations you still have doubts about your rights and small-claims strategy, you should consult your lawyer, at least briefly. A firm of your apparent size should have a working relationship with a lawyer or law firm versed in commercial law.

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Answered on 11/16/00, 11:08 pm


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