When does discharge by accord and satisfaction occur?

Discharge by accord and satisfaction occurs when the parties to a contract agree to settle an existing obligation through a new contract. This typically involves one party agreeing to accept a different performance than what was originally stipulated in the contract as full satisfaction of the obligation. The concept encompasses two primary components: the "accord," which is the new agreement or settlement reached, and the "satisfaction," which is the execution of that agreement that fulfills the original obligation.

In this context, choosing the option about a new contract effectively addresses the resolution of disputes or obligations associated with the initial contract. The agreement to accept an alternative performance establishes a legal resolution that satisfies both parties, thereby discharging the original contract. This allows for flexibility in contractual relationships, as parties can negotiate and settle disputes rather than pursuing legal remedies, which can be time-consuming and costly.