Many jobs were put on hold due to the COVID-19 pandemic and, as the economy opens back up, it’s possible there could be an increase in price disputes. Glazing contractors should be aware that cashing a check marked “payment in full” could prevent them from making a claim for a disputed, unpaid balance in the future.
According to Patrick Barthet, founder of the Barthet Firm, in a blog post for The Lien Zone, cashing a check marked “payment in full,” may mean that the subcontractor cannot make a claim for an unpaid, disputed balance. This is especially true when the notation is written on the back of the check above the endorsement line and the check is accompanied by a letter explaining why the balance has been paid in full. It also depends, in part, upon the state in which the dispute takes place.
Barthet says that cashing the check under the above circumstances could be construed by a judge as “a complete discharge of a given obligation” since the subcontractor would have been made aware of the client’s intent and, despite disputed the amount owed, cashed the check anyway.
Crossing out the “payment in full” notation may work in some cases, explains Barthet, but some courts may argue that doing so must be agreed to mutually by both parties.