Many businesses, including nonprofit businesses, face the dilemma associated with receiving or sending a check marked “In Full Satisfaction” in the midst of a disagreement with a vendor. The situation usually starts out with a dispute between a buyer and a seller of goods that ends up with the buyer sending the seller a check for less than the entire amount that the seller claims is due. The check or the accompanying letter ordinarily includes language to the effect that deposit of the check constitutes full satisfaction of the disputed amount. Cash the check and forever hold your peace.

The seller typically has not agreed to the proposed compromise but is reluctant to return the money in hand. The seller wants to deposit the check and still be able to claim the balance due. Is the seller stuck with the compromise if it deposits the check?