Opinion ID: 1125702
Heading Depth: 2
Heading Rank: 1

Heading: Executory accord or substituted contract.

Text: The principal issue in this case will be resolved by our interpretation of counsel's letter to the Johnsons of May 12, 1967, supra; i.e.: Was the proposed compromise agreement, which the Johnsons accepted, an executory accord or a substituted contract? A compromise agreement is a contract whereby the parties, in an effort to resolve their differences over a claim, agree to an amicable settlement based upon mutual concessions. Compromise agreements are usually divided into two principal categories: One may be called an executory accord; the other may be called a substituted contract. If the compromise provides for the acceptance in the future of a stated performance in satisfaction of the claim, the contract is an executory accord. [1] If, on the other hand, the compromise agreement itself is accepted as a substitution for and extinguishment of the existing claim, then the compromise is a substituted contract. [2] Or, to state it another way, an agreement that operates as a satisfaction of an antecedent claim only when performed is an executory accord, and an agreement that operates as an immediate substitution for and extinguishment of an antecedent claim is a substituted contract. The distinction becomes vital in relation to the remedies available to the nonbreaching party if and when the compromise agreement is broken. If an executory accord is breached, the nonbreaching party may sue either upon the original obligation or upon the compromise agreement. As stated in Restatement of Contracts § 417(c) (1932): If the debtor breaks such a contract the creditor has alternative rights. He can enforce either the original duty or the subsequent contract. This is the prevailing view throughout the American jurisdictions. See Owens v. Hunter, 91 Ariz. 7, 368 P.2d 753 (1962); Silvers v. Grossman, 183 Cal. 696, 192 P. 534 (1920); Hinkle v. Basic Chem. Corp., 163 Colo. 408, 431 P.2d 14 (1967); Wilson v. Bogert, 81 Idaho 535, 347 P.2d 341 (1959); Daly v. Chicago & N.W. Ry. Co., 262 Minn. 351, 114 N.W.2d 682 (1962); Ladd v. General Ins. Co., 236 Or. 260, 387 P.2d 572 (1963); Nash v. Atlantic White Tower System, Inc., 404 Pa. 83, 170 A.2d 341 (1961); Stratton v. West States Constr., 21 Utah 2d 60, 440 P.2d 117 (1968); Annot., 94 A.L.R.2d 504 (1964); 6 A. Corbin, Contracts § 1275 (1962).