In this legal contract, the parties agree to enter into a new agreement to accept alternate performance to discharge a preexisting duty. The parties to enter into a contract or an agreement work for the satisfaction of each other.
When participants agree to accept an alternative performance rather than the contract’s terms of the contract and circumstances, they are said to have reached an agreement to discharge a claim. This contract is most commonly used in debt settlements. For example, suppose a man has a loan agreement with a bank and he has to repay the loan amount, thus inflicting pressure upon himself.
A revised agreement for repayment of the loan in a lower interest rate shall satisfy the man, and this is an instance of performance to the satisfaction of another. This step is in the interest and benefit of both parties. By such performance of a contract, the creditor receives some payment of a debt, and the debtor is relieved from the full obligation of the repayment.
Fundamentals of Accord
A valid accord requires four elements, such as appropriate subject matter, capable parties, common mindsets, and adequate consideration. This idea is concerned with the debtor’s offer of repayment and the creditor’s acceptance of a lower payment than the original demand. The accord is an agreement where both the parties achieve benefits out of their discharge of duties. Such benefits help each other to gain the maximum satisfaction out of work done by the other. Consideration is an essential element that is a value given in consideration of promise. The consideration is bargained for, and the bargained amount has a legal value. In exchange for a promise, there may be a return promise or security for a new obligation. The performance shall be an act or forbearance. An agreement might be expressed or implied depending on the circumstances. The principle of accord lets the parties achieve the pre-decided goal by complying with the terms mentioned in an agreement or a contract.
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