SETTLEMENT OF AN UNLIQUIDATED DEBT (Disputed Debt) - a debt that is disputed as to either its existence or its amount. An unliquidated debt is discharged if an accord and satisfaction have occurred.

1)REQUIREMENTS FOR AN ACCORD AND SATISFACTION - An accord and satisfaction can occur under two different situations:

SITUATION #1

1)There is an unliquidated debt AND

2)The debtor decides on his own to send a check to the creditor (without any prior negotiation, discussion or agreement with the creditor), in full payment of the debt a lesser amount than is claimed by the creditor. The debtor writes on the check that payment is being offered in "full satisfaction" of the debt AND

3)The creditor upon receipt of this check endorses it and deposits it into his bank account. If this occurs, an accord and satisfaction occurs and if the creditor wants to sue for the remaining balance of the debt he will lose his case because he already accepted the debtor's check in "full satisfaction" of the debt by endorsing and depositing it.

4)EXCEPTION: New York Law allows the creditor to legally prevent this accord and satisfaction if the creditor, before he endorses and deposits the check, also writes on the back of the check, either of the two following words; "under protest" or "without prejudice". By writing either of these two phrases on the back of the check, along with his endorsement, the creditor prevents the accord and satisfaction and reserves his right to later sue for the remaining balance of the debt he claims is due from the debtor.

Assume that you are an accountant who works for the Porter Accounting Firm ("the Firm"). Your boss has given you an assignment to find out from the legal department how to deal with a legal matter regarding a former client, Mike Anderson. After being consulted by the legal department, you are to draft a business memorandum addressed to your boss, Evelyn Porter, explaining the information that was given to you by the legal department.

Your boss informs you that the former client, Mr. Anderson, entered a written and signed a contract with the Firm on January 11, 2021, under which Mr. Anderson agreed to pay the Firm. $10,000 for accounting services. The accounting services that Mr. Anderson contracted for were recently completed.

Nevertheless, Mr. Anderson has informed the Firm that, in his opinion, the accountant that handled his account didn't work a good job.As a result, he does not feel that he should pay the Firm the $10,000 as per the contract terms. He has been calling the office arguing back and forth about this matter for the last two weeks. He is willing to send a check for $5000 (the amount that he thinks the services were worth) as full payment for accounting services.

In the memorandum to Ms. Porter, specifically discuss and explain the legal consequence, if any, if Mr. Anderson sends $5000 to the office, without any negotiations with the firm, and the firm accepts that payment and deposits the check in its bank account. The memorandum should address the following questions:

1) Would the firm be able to sue him later for the $5000 balance and why?

2) What type of debt is involved in this situation? and

3) What does the law state regarding the settlement of this type of debt?

use the appropriate legal rules and legal terminology related to Unliquidated debt , but should also explain clearly so that Ms. Porter, who has no background in law, will understand.

The heading of the Memorandum should look like the following:

MEMORANDUM

TO:Ms. Evelyn Porter

FROM:Your Name

RE:Settlement of Contract between Mike Anderson and the Porter Accounting Firm