The Executory Accord

by Melito & Adolfsen
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A litigator knows how to assert breach of contract. There may be other theories of liability as well, like anticipatory breach, interference with contract or unjust enrichment. But how many of you have ever heard of an “executory accord”? This is how I learned this principle of contract law.

A number of years ago our firm was retained to sue on behalf of a company who had agreed to perform introductions to a company that had a service business. Under the contract that our client executed prior to engaging us they were to be paid a percentage of the sales from each introduction. The company promising to pay the percentages was a start-up company and had some slow going. For that reason, it said to our clients that it preferred to pay them the sum of $40,000 per month in lieu of the percentage. The new contract also permitted termination on 30 days notice.

Our clients, again before they engaged us, said that they were willing to accept the second contract provided that it was performed. In other words if they were not paid the $40,000 per month under the second contract, they were going to rely on the first contract and demand the percentage of sales payment. When the second contract was not performed, we were engaged by the companies performing the introductions and asked to sue.

Because the matter was such a bitter dispute, regrettably we decided to make a claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). First, we failed to plead it properly, neglecting to allege a conspiracy. Then, when we did allege a conspiracy, the federal judge saw through it and said that RICO simply was not applicable. While the district judge could have retained jurisdiction, he declined to do so and dismissed the case remanding it to our state court. The federal judge issued his decision orally from the bench and then took us to chambers and asked if there was any possibility of settlement. The bitterness between the parties continued and the judge sensed that settlement was not possible at that time. We then got up to leave and began walking out of the court room when someone, who apparently had listened to the argument we made before we went into the Judge’s chambers, mumbled: “sounds like an exectory accord.” No one said anything but I was puzzled by the comment.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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