Opinion ID: 846741
Heading Depth: 1
Heading Rank: 6

Heading: applying mcl 440.3311 of the ucc to this case

Text: The first requirement of an accord and satisfaction is a good-faith tender to the claimant as full satisfaction of the claim. MCL 440.3311(1)( i ). Article 3 contains an internal definition of good faith: `Good faith' means honesty in fact and the observance of reasonable commercial standards of fair dealing. MCL 440.3103(1)(d). Defendants demonstrated honesty in their settlement offer to plaintiff. They offered plaintiff what defendants thought was a fair deal. In their letter to plaintiff, as part of the accord, defendants went through the various additions to the construction contract. They estimated what each cost and listed each disputed item. Juanita Rems Hahn gave a full explanation of why defendants thought they should not have to pay for the disputed items. Defendants' accounting also included a detailed list of all payments made. In total, the accounting covers several pages. After adding their estimation of all costs and subtracting all the payments, defendants arrived at $5,144.79 as the amount of the accord and tendered it to plaintiff. Given that this tender was made in such detail and with clear explanations of its reasoning, we conclude that defendants' tender was made in good faith as required by MCL 440.3311(1)( i ). The second requirement of an accord and satisfaction involving a negotiable instrument is that the claim be unliquidated or subject to a bona fide dispute. MCL 440.3311(1)( ii ). Black's Law Dictionary (7th ed.) defines an unliquidated claim as a claim in which the liability of the party or the amount of the claim is in dispute. [10] Plaintiff performed extra work without an agreement regarding the amount to be paid. Because the cost of the changes and overruns were left unspecified and are in dispute, the claim for them is unliquidated. Plaintiff argues the contrary. It asserts that, to the extent that defendants conceded that they owed part of the disputed debt, that portion of the debt was liquidated. This Court previously rejected this argument: The fact that part of the claim was conceded did not divide the liability into two liquidated claims. Whatever the rule in other jurisdictions, this court holds that such a claim is unliquidated and payment of the conceded amount furnishes consideration for settlement of the whole. [ Lehaney v. New York Life Ins. Co., 307 Mich. 125, 131, 11 N.W.2d 830 (1943), quoting Long v. Aetna Life Ins. Co., 259 Mich. 206, 209, 242 N.W. 889 (1932).] See also Tanner v. Merrill, 108 Mich. 58, 65 N.W. 664 (1895). Defendants' concession of part of the debt has no effect on the question whether the claim was liquidated. The third requirement contained in MCL 440.3311(1) is that the claimant must obtain payment of the instrument. MCL 440.3311(1)( iii ). The requirement was satisfied here because plaintiff negotiated defendants' check by depositing it. Once the first three requirements are satisfied, the question becomes whether the claim was discharged. Under the statute, there are two ways to discharge a claim. According to MCL 440.3311(2), a claim is discharged if the instrument, or an accompanying written communication, contains a conspicuous statement that the tender is in full satisfaction of the claim. [11] Second, under MCL 440.3311(4), a claim is discharged if the claimant, or the claimant's agent, knew that the defendant tendered the instrument in full satisfaction of the claim. MCL 440.3311(4) controls this case. Plaintiff's president testified that he knew defendants' intention in sending the letter and check. He stated that defendants intended the check as a final payment. He claimed merely that he believed that defendants' attempt to establish an accord did not satisfy Michigan law. Plaintiff's president consulted an attorney on this question, and counsel erroneously informed him that the accord would be valid only in Indiana, not in Michigan. MCL 440.3311(4) contains no exception for a mistaken understanding of the law. It requires only that a claimant know that the instrument was tendered in full satisfaction of the claim. Plaintiff knew that defendants intended the payment to be final and in full satisfaction of the claim. Therefore, an accord and satisfaction exists, despite plaintiff's mistake of law. Even if we did not find a discharge of the debt under MCL 440.3311(4), we would find one under MCL 440.3311(2). That subsection provides: Unless subsection (3) 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. [MCL 440.3311(2).] MCL 440.1201(10) defines conspicuous. Conspicuous: A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: non-negotiable bill of lading) is conspicuous. Language in the body of a form is conspicuous if it is in larger or other contrasting type or color. But in a telegram any stated term is conspicuous. Whether a term or clause is conspicuous or not is for decision by the court. The Uniform Commercial Code comment further discusses the meaning of conspicuous. Comment 4 of MCL 440.3311 opines: If the claimant can reasonably be expected to examine the check, almost any statement on the check should be noticed and is therefore conspicuous. In this case, defendants wrote the words final payment on the comment line of the check. They were in capital letters and not obfuscated in any way. They meet the definition of conspicuous because they were written so that someone would notice them. MCL 440.1201(10). Therefore, inclusion of final payment on the check satisfied the requirements of MCL 440.3311(2). The letter sent with the check also contains a conspicuous statement that the check discharges the claim. Specifically, the letter provided: If we send you a check for $5144.79 we will consider this account closed and will not expect discussion of the other  items. We will then expect the lein [sic] waiver to be sent. If this is not acceptable, we will have to resort to arbitration per attorney [sic]. This statement was the concluding paragraph, directly above the signature line. It was not placed in a footnote or other location that plaintiff might skip over while reading. Therefore, it too was a conspicuous statement that the check was tendered as full satisfaction of the claim, and that the claim was discharged. [12] Two exceptions to MCL 440.3311(2) exist in MCL 440.3311(3). Neither applies to this case. Defendants' tender satisfied all the requirements of MCL 440.3311. Therefore, an accord and satisfaction occurred. Plaintiff's acceptance of the check discharged the claim.