The case of General Motors UK Ltd v The Manchester Ship Canal Company Ltd concerned a licence agreement which allowed General Motors to discharge surface water into the canal for a modest annual fee of £50.
Full and Final Satisfaction? Beware!
If you are owed money and the debtor sends a cheque stated to be in “full and final satisfaction” of the debt, you must proceed with caution.
The temptation will obviously be to cash the cheque and pursue the balance, but can you do this?
The safest course of action is to return the cheque. However, if you are sufficiently clear that the cheque is accepted in part satisfaction only, you may be able to cash the cheque without losing the right to claim the balance.
You should write back to the debtor stating that the cheque is accepted in part satisfaction only and will be cashed 7 days from the date of the letter on that basis. This gives the debtor time to stop the cheque or to object to it being taken in part satisfaction only. If he does neither then the cheque can be cashed and the balance of the debt pursued.
If the cheque is cashed without you doing this then you have only a very small window of opportunity to tell the debtor it is accepted in part satisfaction only. The Courts have held that a delay of a week was not fatal, but a delay of 7 weeks was too long.
If you are owed money and would like advice then please contact Tessa Ingram on 01242 574 244.