The Commercial Code Text on Full Satisfaction
The Uniform Commercial Code has a section on an instrument tendered to a claimant as full satisfaction of a claim. A separate section addresses performance under an explicit reservation of rights. This guide quotes words from both. It does not say whether either applies to any item.
This guide explains the text of two Uniform Commercial Code sections. It is not legal advice. The text quoted is the uniform text. This guide does not say whether or how any state applies it. It does not define the quoted words. It does not say that either section applies to any instrument, deduction, contract or other item.
What does UCC 3-311 say about an instrument tendered as full satisfaction?
UCC 3-311(a) says that if a person against whom a claim is asserted proves three things, "the following subsections apply".
The section is titled "Accord and Satisfaction by Use of Instrument". The three things are stated in these words: "that person in good faith tendered an instrument to the claimant as full satisfaction of the claim", "the amount of the claim was unliquidated or subject to a bona fide dispute", and "the claimant obtained payment of the instrument".
This guide does not say whether any of the three is met by any instrument or claim. It does not say who is the claimant, or the person against whom a claim is asserted, in any deal.
What does UCC 3-311 say about a conspicuous statement?
UCC 3-311(b) is about a conspicuous statement in an instrument or an accompanying written communication.
UCC 3-311(b) says: "Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim."
Subsection (b) comes after subsection (a), which is quoted above. This guide does not say whether any statement is conspicuous, whether any instrument or written communication contained such a statement, or what follows for any claim.
What do UCC 3-311(c) and (d) say?
UCC 3-311(c) has two paragraphs, and subsection (d) follows it.
UCC 3-311(c) begins: "Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies".
Paragraph (1) refers to "a designated person, office, or place". Paragraph (2) refers to "repayment of the amount of the instrument" and states a period. Subsection (d) refers to what "the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew".
This guide does not restate these provisions or the period. The period is stated in the text of paragraph (2); the source is listed at the end of this page. It does not say that any of the provisions applies to any instrument, claim or person.
What does UCC 1-308 say about a reservation of rights?
UCC 1-308 is titled "Performance or Acceptance Under Reservation of Rights". It has two subsections. Subsection (a) refers to an explicit reservation of rights, and subsection (b) refers to an accord and satisfaction.
UCC 1-308(a) says: "A party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved." Subsection (a) has a second sentence. This guide does not restate it.
UCC 1-308(b) says: "Subsection (a) does not apply to an accord and satisfaction."
UCC 1-308 is a separate section and is not part of UCC 3-311. This guide uses the text's own words, party and other party, and does not say who holds either role in any deal.
This guide does not say whether any instrument or transaction is an accord and satisfaction, how UCC 1-308 relates to UCC 3-311, or what a reservation of rights does for any party.
Questions
What is UCC 3-311 about?
- Its title is "Accord and Satisfaction by Use of Instrument". Subsection (a) refers to an instrument tendered to a claimant as full satisfaction of a claim, and subsection (b) is about a conspicuous statement. This guide does not say whether the section applies to any item.
Does this guide say what a reservation of rights does?
- No. This guide quotes the words of UCC 1-308 and does not say what a reservation of rights does for any instrument, party or claim.
Does this guide apply the text to a particular instrument?
- No. This guide explains cited text. It makes no statement about any particular instrument, deduction, contract or company. It does not say whether or how any state applies the uniform text.
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Sources: UCC 3-311 and UCC 1-308, Cornell Law School Legal Information Institute (https://www.law.cornell.edu/ucc/3/3-311 and https://www.law.cornell.edu/ucc/1/1-308). The sections are shown without the Official Comments. This guide reflects the text as published there when it was written.