Is a notation on a check binding if the check is cashed?

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Is a notation on a check binding if the check is cashed?

A credit card company said verbally my account of $6,000 was written off. I sent a check to the company for $100. I wrote a statement on the front and back. The statement was “by cashing this check you accept this money as payment in full”. I believe the statement on the check established a contract between the 2 of us. I believe that by cashing the check the contract was accepted. The credit card company now is taking me to court.

Asked on August 24, 2010 under Business Law, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Unfortunately, you are not correct. Annotations or comments on a check, whether on the back, the front, the memo field, etc. have no legally binding effect as a general matter--and in particular, they do not form an agreement when the the person righting the check owes money to the other  party. To form a contract or agreement, there must be consideration--or something given in exchange for the other party's promise, performance, services, etc. However, if you already owe someone money, you cannot use that money as consideration, since it is money you are already obligated to provide. (Consideration must be something you do NOT already owe to the other party.) Since you owed the credit card company $6,000, when you sent them a check for $100, they could apply that check vs. your outstanding balance owed. The $100 was not consideration for a new agreement.


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