Can you use “Reservation of Rights” on a check endorse with “Payment in Full” in the memo section?

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Can you use “Reservation of Rights” on a check endorse with “Payment in Full” in the memo section?

And if yes, where do you put it?

Asked on July 31, 2015 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

The memo section generally has no legal effect. And if you owe more than the amount of the check, nothing you write on the check will diminish the other party's ability to cash the check and then seek the remainder of the money (e.g. sue you, if necesary). The only way to settle a debt or obligation for less than the full amount is to get a signed settlement agreement FIRST, before sending any money: if the other side agrees in writing in advance to accept a certain amount as payment in full, then so long as you make that payment on time, they are bound by that agreement.


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