If I changed the terms of an agreement with a debt collector and they cashed my check, are they bound by the new terms?

I changed the terms on a payment agreement before I signed it and returned it to a third party debt collector. When I sent in my payment along with it I wrote on the check “as per agreement signed on X”. They cashed my check and rejected the payment agreement. I changed the first payment from $200 to $100 and requested clarification of principal and interest amounts being credited with my monthly payments within 10 days prior to my next payment. I nstead received a “notice of intent of legal action”. Can they do that if they cashed my check that went with my signed agreement?

Asked on May 30, 2012 under Bankruptcy Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Yes, they can do this:

1) When they sent you the agreement, they were making you an offer to form a contract; if you had accepted that offer as is and performed under it, it would be valid and enforceable.

2) When you changed the agreement, however, you rejected their offer; therefore no contract was signed unless they specifically accepted your new counteroffer.

3) In the absence of an agreement, a creditor is allowed to simply apply any payments received against the amount due; therefore, since they had the right to apply your check against what you owed them, the check did not constitute "consideration" for a new agreeement (your counteroffer), since they had the right to cash the check and apply it against what you owed them. Thus, the fact that they cashed the check neither provided consideration to bind the agreement nor even demonstrated their acceptance of your counteroffer, since, as noted, they had a right to take the money you sent them regardless of what you wrote on the check. (There is a common myth that writing something on the check has legal effect; while I won't say that it never does, in the majority of cases, it does not.)

Therefore, they were entitled to cash your check, to ignore your counteroffer, and then to proceed against you legally. Your only right is that whatever you did pay by check needs to be properly credited against your balance.

In the future, be aware that you can't bind someone simply by modifying an agreement they'd sent you for signature: you need to make your counter proposal and get their clear, unequivocal agreement to it.


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