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Daycare Center and Family Home Forum>Two Week Notice.....
B Lou 12:54 PM 10-13-2011
So I had a parent that owed me $96.00 for a two week notice. When she came to pay her bill she gave me a check for only $35.96. And in the memo it states FINAL PAYMENT. If I cash this check is it my agreeing to only the $35.96? Or can I bill her the rest?
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sharlan 12:58 PM 10-13-2011
Going back to my business law class, 35 yrs ago, yes, if you cash the check, you are accepting it as final payment. I would not cash it.

Send her a certified letter requesting the full amount, letting her know that you will not be cashing the other check, and will be taking it to small claims court if she does not comply.
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B Lou 01:03 PM 10-13-2011
Thank you Sharlan. That's what I thought but wanted to check with others.
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pfund2233 02:42 PM 10-13-2011
Originally Posted by sharlan:
Going back to my business law class, 35 yrs ago, yes, if you cash the check, you are accepting it as final payment. I would not cash it.

Send her a certified letter requesting the full amount, letting her know that you will not be cashing the other check, and will be taking it to small claims court if she does not comply.
Absoulutly!! I'm back in school for my BA in Criminal Justice. And yes DO NOT CASH THAT CKECK. Now if she would not have put "final payment" in the memo you could bill her for the remainder of the balance. Do the certified letter requesting full payment like suggested above and I would add the small claims court fees to the balance if it has to go that far. I know here to take some one to small claims court is $82.00!

GOOD LUCK!!
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Unregistered 02:54 PM 10-13-2011
Depends on where you are at...but more likely than not, you can still collect the remainder if you cash the check....

ACCEPTING A CHECK MARKED "FULL AND FINAL PAYMENT": THE CALIFORNIA STATUTORY CONFLICT

By Stuart B. Wolfe and Melissa M. Albrecht

Under California law, there are two statutes that appear to govern a situation where there is a disputed debt between a creditor and a debtor and the debtor tenders a check marked "full and final payment" as an offer to settle the dispute. Under the first statute, the creditor may accept the check, strike the "full and final payment" language, and then continue to attempt recovery of the additional sums owed. Under the second statute, if a creditor accepts such a check marked "full and final payment," the entire debt is discharged regardless of whether the creditor strikes the language or otherwise shows an intention not to discharge the entire debt. The creditor is then barred from attempting any further recovery on the debt. Thus, in California, it is unclear what a creditor should do upon receiving such a check in order to preserve his right to continue collecting on the remaining amounts due.



The Common Law and California Civil Code Section 1526

Until 1987, the common law was the applicable law governing the effects of accepting a check with conditional language such as "full and final payment." Under the common law, any acceptance by the creditor was considered a discharge of the entire debt, thereby precluding the creditor from attempting to collect any remaining balance due and owing. However, in 1987, the common law approach was abrogated by the enactment of California Civil Code § 1526. Under this new statute, a creditor may retain a check marked "full and final payment" as a partial discharge of the obligation. The acceptance will not discharge the underlying debt. It states, in pertinent part:

"Where a claim is disputed or unliquidated and a check or draft is tendered by the debtor in settlement thereof in full discharge of the claim, and the words 'payment in full' or other words of similar meaning are notated on the check or draft, the acceptance of the check or draft does not constitute an accord and satisfaction if the creditor protests against accepting the tender in full payment by striking out or otherwise deleting that notation or if the acceptance of the check or draft was inadvertent or without knowledge of the notation."

This section was interpreted by the United States Bankruptcy Court which stated that § 1526 was intended to limit this type of satisfaction to circumstances where the creditor clearly expressed an intent to settle the disputed claim. It allows the creditor to communicate its express intent not to enter into an accord and satisfaction "by striking out or otherwise deleting" the notation "payment in full," or similar words. The court also stated the terms "otherwise delete" were broad enough to include a creditor's letter to the debtor indicating that it was accepting the check only in part payment of the obligations between the parties. The creditor does not have to make any physical markings or obliterations on the instrument itself in order to come within this statutory exception to the California law of accord and satisfaction. Thus, under this statute, as long as the conditional language is stricken or there is an accompanying letter memorializing the creditors intent not to discharge the entire debt, there will be no satisfaction of underlying debt simply by accepting the check.

Commercial Code Section 3311

In 1992, the California legislature enacted Commercial Code § 3311. This section essentially restates the common law rule and makes no reference Civil Code § 1526. It states that a debtor can claim the debt has been discharged by the creditor if the debtor can prove that there was an honest dispute as to the amount owed, and that he, in good faith, tendered a check indicating that is was a full and final payment in full satisfaction of the debt, and that the creditor accepted the check. Once these elements are proven, regardless of the creditors actions to revoke the full and final payment language, the debt is discharged and the creditor is thereafter barred from attempting a recovery of the remaining sums still due.

The statute notes two exception to this rule. First, if the creditor is an organization and proves that within a reasonable time before the tender by the debtor, it sent a notice to the debtor that any and all instruments or communications concerning the debt are to be sent to a designated person or office, and the instrument or accompanying communication was not received by that designated person or place, the debt will not be discharged. Secondly, if the creditor proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the debtor, the debt will not be discharged.

Resolving the Conflict

As these two statutes appear to be in direct conflict, a creditor is left in the dark as to how to proceed in such a situation. The California courts have not yet addressed this issue and thus, there is no real authority to shed any light on the problem. There is a federal case addressing this issue, however, it is merely persuasive law. In that case, the court held that as the statutes were in direct conflict and could not be reconciled, pursuant to the rules governing statutory construction, the later in time will prevail over the earlier. Therefore, as Civil Code § 1526 was enacted in 1987 and Commercial Code § 3311 was enacted in 1992, the court gave effect to the later statute. This precedent is not binding on California courts, thus the conflict still exists.

Creditor's Options in Light of the Statutory Conflict

Given the conflict, there are a few options which will protect a creditor from discharging the debt and possibly still allow him to accept a check with full and final payment language.

A. Return the check and request another check without the full and final language.

This is the safest approach as it will eliminate any confusion as to whether, under California Commercial Code § 3311, the creditor has inadvertently discharged the remainder of the debt by accepting it or if, under California Civil Code § 1526, striking through the wording is sufficient in order to preserve a claim on the remaining amount.

B. Accept the check, strike the full and final wording, and obtain a signed agreement from the debtor acknowledging that he agrees the check is not intended as a full and final payment.

This approach is not quite as safe as the first in that a court may still hold that, under California Commercial Code § 3311, any acceptance of a check with full and final payment language discharges the entire underlying debt. However, an argument can be made that obtaining a signed letter from the debtor memorializing his intent that the payment is not in fact a full and final payment will exclude the debtor from the protections of § 3311.

Under California Commercial Code § 3311, a good faith tender in an attempt to settle the entire disputed debt is required. Since the debtor has admitted in the letter that he knows the check is not a full and final settlement of the entire debt, arguably he can not offer a good faith tender as required by the statute, thereby excluding him from the protections of § 3311.

Further, striking through the full and final language on the check will ensure the protection of the creditor in case California Civil Code § 1526 is held to apply. With both of these safeguards, it is likely that, regardless of which statute applies, the creditor will be protected against an inadvertent discharge of the debt while still being able to accept a portion of the disputed debt.

C. Reject the check in its entirety.

Although this option is safe, it leaves the creditor empty handed. It avoids any confusion as to which statute applies and what the creditor's obligations are under that statute. However, having a portion of the debt in hand may be better than the possibility of recovering nothing or a sum substantially less than what the creditor has to date. A creditor must balance the likelihood of obtaining a greater amount and the expense associated with the further recovery actions against the sufficiency of the amount paid to date.

A Decision Regarding Handling of the Check Must Be Made Promptly Upon Receipt of the Check

It is imperative that a decision is made regarding the handling of the check as soon as possible. An exception to the California Commercial Code § 3311 exists if the creditor returns the check within 90 days, the debt will not be discharged and the creditor will be able to continue to seek any additional sums he believes he is owed. Thus, the check must be returned within 90 days to take advantage of this exception. Otherwise, keeping the check for an extended period of time may, arguably, imply an acceptance of the check as a full and final payment of the debt by the creditor under both the California Commercial Code and Civil Code.
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sharlan 03:07 PM 10-13-2011
Originally Posted by Unregistered:
Depends on where you are at...but more likely than not, you can still collect the remainder if you cash the check....

ACCEPTING A CHECK MARKED "FULL AND FINAL PAYMENT": THE CALIFORNIA STATUTORY CONFLICT

By Stuart B. Wolfe and Melissa M. Albrecht

Under California law, there are two statutes that appear to govern a situation where there is a disputed debt between a creditor and a debtor and the debtor tenders a check marked "full and final payment" as an offer to settle the dispute. Under the first statute, the creditor may accept the check, strike the "full and final payment" language, and then continue to attempt recovery of the additional sums owed. Under the second statute, if a creditor accepts such a check marked "full and final payment," the entire debt is discharged regardless of whether the creditor strikes the language or otherwise shows an intention not to discharge the entire debt. The creditor is then barred from attempting any further recovery on the debt. Thus, in California, it is unclear what a creditor should do upon receiving such a check in order to preserve his right to continue collecting on the remaining amounts due.



The Common Law and California Civil Code Section 1526

Until 1987, the common law was the applicable law governing the effects of accepting a check with conditional language such as "full and final payment." Under the common law, any acceptance by the creditor was considered a discharge of the entire debt, thereby precluding the creditor from attempting to collect any remaining balance due and owing. However, in 1987, the common law approach was abrogated by the enactment of California Civil Code § 1526. Under this new statute, a creditor may retain a check marked "full and final payment" as a partial discharge of the obligation. The acceptance will not discharge the underlying debt. It states, in pertinent part:

"Where a claim is disputed or unliquidated and a check or draft is tendered by the debtor in settlement thereof in full discharge of the claim, and the words 'payment in full' or other words of similar meaning are notated on the check or draft, the acceptance of the check or draft does not constitute an accord and satisfaction if the creditor protests against accepting the tender in full payment by striking out or otherwise deleting that notation or if the acceptance of the check or draft was inadvertent or without knowledge of the notation."

This section was interpreted by the United States Bankruptcy Court which stated that § 1526 was intended to limit this type of satisfaction to circumstances where the creditor clearly expressed an intent to settle the disputed claim. It allows the creditor to communicate its express intent not to enter into an accord and satisfaction "by striking out or otherwise deleting" the notation "payment in full," or similar words. The court also stated the terms "otherwise delete" were broad enough to include a creditor's letter to the debtor indicating that it was accepting the check only in part payment of the obligations between the parties. The creditor does not have to make any physical markings or obliterations on the instrument itself in order to come within this statutory exception to the California law of accord and satisfaction. Thus, under this statute, as long as the conditional language is stricken or there is an accompanying letter memorializing the creditors intent not to discharge the entire debt, there will be no satisfaction of underlying debt simply by accepting the check.

Commercial Code Section 3311

In 1992, the California legislature enacted Commercial Code § 3311. This section essentially restates the common law rule and makes no reference Civil Code § 1526. It states that a debtor can claim the debt has been discharged by the creditor if the debtor can prove that there was an honest dispute as to the amount owed, and that he, in good faith, tendered a check indicating that is was a full and final payment in full satisfaction of the debt, and that the creditor accepted the check. Once these elements are proven, regardless of the creditors actions to revoke the full and final payment language, the debt is discharged and the creditor is thereafter barred from attempting a recovery of the remaining sums still due.

The statute notes two exception to this rule. First, if the creditor is an organization and proves that within a reasonable time before the tender by the debtor, it sent a notice to the debtor that any and all instruments or communications concerning the debt are to be sent to a designated person or office, and the instrument or accompanying communication was not received by that designated person or place, the debt will not be discharged. Secondly, if the creditor proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the debtor, the debt will not be discharged.

Resolving the Conflict

As these two statutes appear to be in direct conflict, a creditor is left in the dark as to how to proceed in such a situation. The California courts have not yet addressed this issue and thus, there is no real authority to shed any light on the problem. There is a federal case addressing this issue, however, it is merely persuasive law. In that case, the court held that as the statutes were in direct conflict and could not be reconciled, pursuant to the rules governing statutory construction, the later in time will prevail over the earlier. Therefore, as Civil Code § 1526 was enacted in 1987 and Commercial Code § 3311 was enacted in 1992, the court gave effect to the later statute. This precedent is not binding on California courts, thus the conflict still exists.

Creditor's Options in Light of the Statutory Conflict

Given the conflict, there are a few options which will protect a creditor from discharging the debt and possibly still allow him to accept a check with full and final payment language.

A. Return the check and request another check without the full and final language.This is the safest approach as it will eliminate any confusion as to whether, under California Commercial Code § 3311, the creditor has inadvertently discharged the remainder of the debt by accepting it or if, under California Civil Code § 1526, striking through the wording is sufficient in order to preserve a claim on the remaining amount.

B. Accept the check, strike the full and final wording, and obtain a signed agreement from the debtor acknowledging that he agrees the check is not intended as a full and final payment.

This approach is not quite as safe as the first in that a court may still hold that, under California Commercial Code § 3311, any acceptance of a check with full and final payment language discharges the entire underlying debt. However, an argument can be made that obtaining a signed letter from the debtor memorializing his intent that the payment is not in fact a full and final payment will exclude the debtor from the protections of § 3311.

Under California Commercial Code § 3311, a good faith tender in an attempt to settle the entire disputed debt is required. Since the debtor has admitted in the letter that he knows the check is not a full and final settlement of the entire debt, arguably he can not offer a good faith tender as required by the statute, thereby excluding him from the protections of § 3311.

Further, striking through the full and final language on the check will ensure the protection of the creditor in case California Civil Code § 1526 is held to apply. With both of these safeguards, it is likely that, regardless of which statute applies, the creditor will be protected against an inadvertent discharge of the debt while still being able to accept a portion of the disputed debt.

C. Reject the check in its entirety.

Although this option is safe, it leaves the creditor empty handed. It avoids any confusion as to which statute applies and what the creditor's obligations are under that statute. However, having a portion of the debt in hand may be better than the possibility of recovering nothing or a sum substantially less than what the creditor has to date. A creditor must balance the likelihood of obtaining a greater amount and the expense associated with the further recovery actions against the sufficiency of the amount paid to date.

A Decision Regarding Handling of the Check Must Be Made Promptly Upon Receipt of the Check

It is imperative that a decision is made regarding the handling of the check as soon as possible. An exception to the California Commercial Code § 3311 exists if the creditor returns the check within 90 days, the debt will not be discharged and the creditor will be able to continue to seek any additional sums he believes he is owed. Thus, the check must be returned within 90 days to take advantage of this exception. Otherwise, keeping the check for an extended period of time may, arguably, imply an acceptance of the check as a full and final payment of the debt by the creditor under both the California Commercial Code and Civil Code.
Be sure that you send it by certified mail AFTER you photocopy the letter and check together.
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daycare 04:39 PM 10-13-2011
i require all of my final payments when notice is given and they must be in cash. I then give them a document to sign that states that all fees have been paid in full and that all services will render on xyz date.
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Christian Mother 06:36 PM 10-13-2011
I wouldn't except the ck at all... I would make sure that if I send it back, that a letter was attached explaining what would happen if you didn't receive full payment promptly. Make sure you make copies of everything that she's gave you as well as what you are intending to send to her. Put in there your phb agreement and her agreement highlighted and underlined with both of your signatures.
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