6. Which of the following defenses would best serve the retailer?

One way a contract may be discharged is by an accord and satisfaction. An «accord» is an agreement in which one party to an existing contract agrees to accept, in lieu of the performance that she is supposed to receive from the other party to the existing contract, some other, different performance. «Satisfaction» is the performance of the accord agreement. Its effect is to discharge not only the original contract, but also the accord contract.

In general, an accord must be supported by consideration. Where the consideration is of a lesser value than the originally bargained-for consideration in the prior contract, it will be sufficient if the new consideration is of a different type or if the claim is to be paid to a third party. A frequently-encountered problem involves the offer of a smaller amount than the amount due under an existing obligation in satisfaction of the claim, i.e., partial payment of an original debt. The majority view is that this will suffice for an accord and satisfaction if there is a «bona fide dispute» as to the claim or there is otherwise some alteration, even if slight, in the debtor's consideration. The accord, taken alone, will not discharge the prior contract. It merely suspends the right to enforce it in accordance with the terms of the accord contract.

With an accord, the parties to an existing obligation agree to accept a different future performance in satisfaction of the obligation. If the performance is carried out (satisfaction), the duty under the original contract is discharged; but if it is not carried out, the original contract remains enforceable. By contrast, in a modification, the parties to an existing obligation agree to a different agreement. The duties of the parties change immediately, and the original terms are no longer in effect. An accord and satisfaction most often arises when payment or performance is overdue or there is a dispute as to the performance that is due. A modification typically occurs before performance is due.

If a monetary claim is uncertain or is subject to a bona fide dispute, an accord and satisfaction may be accomplished by a good faith tender and acceptance of a check when that check (or an accompanying document) conspicuously states that the check is tendered in full satisfaction of the debt. UCC § 3-311.

The consideration doctrine is designed to enforce promises that are «bargained for.» There are some promise which, although the promisor makes them without bargaining for anything in return, nonetheless induce the promise to rely to his legal detriment. This situation is known as promissory estoppel, which arises when a promise is made that the promisor should reasonably expect to induce action or forbearance on the part of the promise. When the promisee then relies on such a promise, a court may bind the promisor to the promise he made if injustice can only be avoided by the enforcement of the promise. The promissory estoppel doctrine requires actual reliance on the promise, and the reliance must have been foreseeable.

If one of the parties seeks to transfer her rights and/or duties under a contract to a third party, this is called an «assignment.» In the event that the party makes the same assignment to another third party, a question arises regarding which third party will prevail. The second assignee will prevail and have priority if she obtains a novation (which is an agreement between the two original contracting parties allowing for the substitution of a new party for an existing one), which supersedes the obligation running to the assignor in favor of the new one running to her.

B is correct. The retailer would be best served by arguing that the manufacturer's deposit of the check discharged the retailer's remaining duty to pay, amounting to an accord and satisfaction. Under the rules of accord and satisfaction, a debtor may make an offer to settle a dispute by offering a check marked «payment in full.» If the notation was sufficiently plain that the creditor should have understood it, and if the amount owed to the creditor is an unliquidated sum, then cashing the check without protest amounts to an acceptance of the offer of an accord and satisfaction of the debt. Although mere payment of a lesser sum would not be sufficient consideration to support the accord, consideration is furnished where the amount owed to the creditor is genuinely in dispute. Because there was a good faith dispute between the retailer and the manufacturer relating to the amount that the retailer owed, the check that was sent to settle the dispute furnished sufficient consideration to support the manufacturer's implicit promise to discharge the debt.

A is incorrect. This is not a case involving estoppel because there was a successful accord and satisfaction, which fully discharged any remaining duty under the contract. As such, when the manufacturer cashed the retailer's check without protest, it accepted the accord and satisfaction and fully discharged the debt.

C is incorrect. There is no evidence of a novation here, which requires the assignment of one party's contractual rights or obligations to a third party and a dispute as to a successive assignment. This is not the case here, where the contractual dispute is between two contracting parties — the retailer and the manufacturer.

D is incorrect. As explained above, no duty was suspended here because the manufacturer accepted the accord and satisfaction, and the debt (i.e., the remaining duty under the contract) was fully discharged.