Question. (for UK residents). What is your position when you receive (or send) a cheque in settlement, and intended to be in, full and final settlement of money you owe or are owed? (This article is primary for construction cases and to avoid having to go to construction adjudication but the UK law applies across the board.
The first question to ask is if the money has been disputed, as to the sum of money involved then there has to be some (legal/material) consideration for offering the smaller sum or the matter will not be considered settled in full and final settlement. This is because both sides have to ‘give’ something and there can be no benefit to the receiving partying if they accept a smaller amount where there is no dispute as to the sum involved.
If the money is in dispute then the matter is more interesting and of course complicated and it will then be decided on the relevant facts. In Andrew Bracken and Ann Trockett v Graham Billinghurst [2003] The Judge (Wilcox) was clear, the offer in that case had been made clearly as in full and final settlement when the cheque was sent. He also made clear that presenting the cheque to the bank would amount to accepting the offer, therefore giving rise to an agreement.
Also referring to Stour Valley Builders v Stuart (1974) Judge Wilcox said “As with any other bilateral contract, what matters is not what the creditor himself intends but what by his words and conduct he has Electrician List led the other party as a reasonable person to believe”. He said further “Cashing the cheque is always strong evidence of acceptance especially if it is not accompanied by immediate rejection of the offer”.
In summary a cheque expressly given in “full and final settlement” will be considered binding if:
(i) the sum of money has been disputed;
(ii) the offer is marked as ‘full and final List Of Construction Companies Near Me settlement’ at the time the cheque is sent;
(iii) the cheque is deposited in the bank and cleared;
(iv) the person banking the cheque has not make it clear at the time that the cheque is not acceptable as being in full and final settlement.
Hope you find that useful.
Construction