Brief Fact Summary. An individual procured an accident and health insurance policy from an insurance company. The individual filed a claim that a certain ailment was disabling and affected his ability to work. Based on this policy, if this was the case, the individual was entitled to certain payments. The insurance company disputed the severity of his injuries.
Synopsis of Rule of Law. "[T]he controlling question in analyzing whether something is a settlement or compromise is what is the intention of the parties."
If it remains unperformed, the promisee may elect to sue on the accord or the original obligation.View Full Point of Law
Issue. Was there "a substituted agreement, an executory accord or not contract at all"?
Held. No. The court concluded that the settlement negotiations between the Plaintiff and the Defendant "did not constitute either a substituted agreement or an enforceable executory accord." As such, the Plaintiff was not prevented from pursuing his claim. The court first recognized that the controlling question in analyzing whether something is a settlement or compromise, is what is the intention of the parties. An intention either "expressed or implied, a superseder of, or substitution for, the old agreement or dispute; or whether it is merely an agreement to accept performance, in futuro, as future satisfaction of the old agreement or dispute." Courts have concentrated on certain factors when analyzing whether an old agreement is discharged by a new one. Those factors include "where the settlement has resulted in formalized papers with unequivocal language", or "formalized or deliberate proceedings in court during the pendency of an action."
• The court then recognizes that where "the settlement negotiations have resulted in no more than in an agreement to accept a future performance, albeit by a promise presently made, in future satisfaction of the old obligations — in this State especially — another principle of law intervenes." That principle is that of an executory accord which is found in section 33-a of the personal property law. An executory accord is enforceable if in writing and signed by the party charged. If the accord remains unperformed, the promissee could sue on the original obligation or the accord.
• Here, the court observed there were only a "series of distinctly informal conversation with bargaining give and take." Additionally, the bargaining never resulted in the "precise terms, time or place for consummation". Finally, nothing on the record suggested "that [the] insured ever intended to accept only a promise of $800 to be paid in the future, as distinguished from an actual present payment, as a present discharge and satisfaction of the insurer's obligations." Based on these three observations, the court concluded there was not a substituted agreement and the requisite intention to discharge a pre-existing obligation.
• The court then recognized an executory accord did not exist because there was not a writing.
Discussion. This case offers an in depth look at substituted agreements and executory accords.