What legal concept involves a new agreement that satisfies previous obligations?

The concept of "accord and satisfaction" refers to a legal arrangement in which two parties agree to settle a dispute by substituting a new agreement to fulfill a prior obligation. This occurs when one party agrees to accept something different from what was originally stipulated in the contract or obligation as satisfaction for that obligation. The key element here is that the new agreement must be accepted as a complete resolution of the original obligation.

For example, if a debtor owes a certain amount of money but cannot pay the full amount, the creditor might agree to accept a lower payment as full satisfaction of that debt. This new agreement (the lower payment) replaces the original obligation (the full amount owed), thereby fulfilling the requirements of both parties.

This concept is important in contract law as it allows for flexibility in how obligations can be resolved, providing a mutually beneficial outcome without the need for more formal litigation while both parties arrive at a satisfactory resolution.