Legal Question in Construction Law in California

The answer to this relatively simple question is actually rather complex. First, there are two provisions of California statutory law on the subject, and they are somewhat in conflict with one another. See Civil Code section 1526 and Commercial Code section 3311, both too lengthy to quote here.

The conflicting statutory language was discussed by the court of appeal in Woolridge v. J.F.L. Electric, Inc. (2002) 96 Cal.App.4th Supp. 52, and the court held that the newer Commercial Code provision superseded the Civil Code, at least under the facts of that case.

I'd say that if the amount of the indebtedness was certain, definite and not subject to a bona fide dispute at the time the "paid in full" check was tendered, the "paid in full" words would not have any legal effect, and that the original amount was still due.

If, on the other hand, the amount then due was subject to doubt, or to a bona fide dispute, the "paid in full" legend COULD PERHAPS make cashing the check a binding acceptance of the amount of the check as a final pay-off........and that Commercial Code section 3311 lays down the rules under which that can happen.

Since you say "more money is owed" as a given fact, I'd say the answer is NO, the words are not binding in that situation. However, if there were a genuine dispute about the amount owed, the right answer is "maybe; look at Commercial Code 3311."