You’re staring at an MBE question about contract discharge, and two answer choices jump out at you: one mentions “accord and satisfaction,” the other says “novation.” Both sound like ways to get out of a contract. Both involve new agreements. And both are testing whether you know the precise legal mechanism that applies to the fact pattern. If you’re fuzzy on the distinction, you’ll pick the wrong answer every time.

Let’s fix that. These doctrines appear regularly on the MBE, and the bar examiners love to test them against each other because students routinely confuse them. The good news? Once you understand the structural difference, you’ll spot the right answer in seconds.

The Core Distinction: What Problem Is Each Doctrine Solving?

Here’s the fundamental difference that unlocks everything else:

Accord and satisfaction resolves a dispute about an existing contract by accepting substitute performance as full satisfaction of the original obligation. The original contract stays in place until the substitute performance is completed.

Novation completely replaces the original contract with a new one. The old contract is discharged immediately, and a brand-new agreement (often with different parties) takes its place.

Think of it this way: Accord and satisfaction is about how you perform. Novation is about who performs or what the entire deal is.

Accord and Satisfaction: The Two-Step Discharge

An accord is an agreement to accept substitute performance in satisfaction of an existing contractual duty. The satisfaction is the actual performance of that substitute obligation.

Here are the elements you need to spot on the MBE:

  1. An existing contract or obligation (often disputed)
  2. Agreement to accept different performance as full discharge
  3. Actual performance of the substitute obligation
  4. Intent to discharge the original duty

The critical timing point: The original obligation is suspended during the accord but not discharged until satisfaction occurs. If the debtor fails to perform the accord, the creditor can sue on either the original contract or the accord (creditor’s choice).

MBE-style hypothetical: Contractor agrees to build a deck for $10,000. After completion, Homeowner disputes the quality and refuses to pay. They agree that Contractor will repair the deck and repaint Homeowner’s fence, and Homeowner will then pay $8,000 as full payment. When Contractor completes the repairs and painting, the original $10,000 debt is discharged by accord and satisfaction.

Notice what happened: There was a dispute about the original obligation. The parties agreed to substitute performance (repair + painting for reduced payment). Once that substitute performance was completed, the original debt vanished.

When Accord and Satisfaction Appears on the MBE

Watch for these fact patterns that scream accord and satisfaction:

Disputed debt scenarios. A contractor’s work is allegedly defective. A buyer claims goods were non-conforming. The parties negotiate a settlement where the obligor will do something different (often for less money) to resolve the dispute.

The “different performance” red flag. If the debtor is offering to do something other than what the original contract required—and the creditor agrees to accept it as full payment—you’re looking at accord and satisfaction.

Check disputes. This is a classic MBE trap. When a debtor sends a check marked “payment in full” for less than the claimed amount, and the creditor cashes it, that can constitute accord and satisfaction if there was a good-faith dispute about the amount owed. The check is the accord; cashing it is the satisfaction.

Timing matters. If the question asks “when is the original obligation discharged?” and you see substitute performance that hasn’t been completed yet, the answer is “not yet”—there’s an accord but no satisfaction.

Novation: Swapping Out the Entire Contract

A novation substitutes a new contract for an old one, immediately discharging the original obligation. The key feature: It typically involves substituting a new party into the contractual relationship.

Elements of novation:

  1. A valid existing contract
  2. Agreement by all parties (including the party being substituted out) to a new contract
  3. Extinguishment of the old contract
  4. A valid new contract (often with a different obligor)

The moment the novation is complete, the original contract is gone. The original obligor is released entirely. There’s no “wait and see” period like with accord and satisfaction.

MBE-style hypothetical: Tenant has a five-year lease with Landlord. Tenant finds a new job in another state and negotiates with Landlord to have NewTenant take over the lease. Landlord, Tenant, and NewTenant all sign an agreement releasing Tenant from all obligations and substituting NewTenant as the party obligated under the lease. This is a novation. Tenant walks away with zero liability.

Contrast this with an assignment or sublease, where the original tenant typically remains liable. In a true novation, the original party is completely out of the picture.

The Party-Substitution Test

Here’s your clearest distinguishing factor for the MBE:

Is a party being completely replaced? If yes, think novation.

Is the same party offering different performance to settle a dispute? If yes, think accord and satisfaction.

Novation almost always involves three parties: the original obligor who wants out, the new obligor stepping in, and the obligee who must consent to the substitution. Accord and satisfaction usually involves just the two original parties renegotiating what performance will satisfy the obligation.

Common MBE Traps: Where Students Go Wrong

Trap #1: Modification vs. Accord and Satisfaction

A contract modification changes the terms going forward but doesn’t necessarily involve a dispute or substitute performance for an existing breach. Accord and satisfaction specifically resolves a dispute about an already-owed obligation by accepting different performance.

If the parties agree before any performance is due to change what’s required, that’s modification. If there’s already a performance dispute and they agree to resolve it with substitute performance, that’s accord and satisfaction.

Trap #2: Novation vs. Delegation

In a delegation, the original obligor remains liable if the delegate fails to perform (unless the obligee agrees to release the delegator). In a novation, the original obligor is completely discharged. The bar examiners love testing this distinction.

Look for language like “released from all liability” or “substituted out of the contract entirely”—that signals novation, not mere delegation.

Trap #3: Accord Without Satisfaction

Remember the two-step process. If the question tells you the parties agreed to substitute performance but the substitute performance hasn’t happened yet, the original obligation is only suspended, not discharged. The creditor can still sue on the original contract if the debtor fails to perform the accord.

What to Memorize for the MBE

Lock in these distinctions:

Accord and Satisfaction:

Novation:

The one-sentence test: If you’re replacing a person, it’s novation. If you’re replacing performance to settle a dispute, it’s accord and satisfaction.

Applying This to MBE Questions

When you see a Contracts question about discharge, ask yourself:

  1. Is there a dispute about an existing obligation? (Points toward accord and satisfaction)
  2. Is someone being completely substituted out of the contract? (Points toward novation)
  3. Has the substitute performance actually been completed? (Determines if there’s satisfaction)
  4. Did all parties—including the one being released—agree to the new arrangement? (Required for novation)

The bar examiners will often give you a fact pattern where a debtor offers to do X instead of Y, the creditor agrees, and then ask “what is the legal effect?” If X hasn’t been performed yet, there’s an accord but the original obligation isn’t discharged. If X has been performed, you have accord and satisfaction and the original obligation is gone.

For novation questions, they’ll typically involve someone trying to get out of a contract by finding a replacement. The key issue is whether all parties agreed to release the original obligor. If not, it’s just a delegation, and the original party remains on the hook.

Putting It All Together

Accord and satisfaction and novation are both contract discharge mechanisms, but they operate in completely different contexts. Accord and satisfaction is your dispute-resolution tool—same parties, different performance, two-step process. Novation is your party-substitution tool—new contract, immediate discharge, everyone must agree.

The MBE tests these doctrines because they require you to read fact patterns carefully and identify the precise legal mechanism at work. Miss the distinction, and you’ll pick the answer that “sounds right” but doesn’t match the legal elements the question is testing.

If you want all 106 Contracts rules organized for active recall—including the complete elements of accord and satisfaction, novation, and every other discharge mechanism the MBE tests—FlashTables breaks them down in a structured two-column format designed for memorization. The rules above come straight from the FlashTables Contracts table, which covers everything from formation through remedies using the exact framework the NCBE tests. Check out the pricing options here if you want the full roadmap for Contracts and the other MBE subjects.

Master the distinction between these two doctrines, and you’ll never hesitate when the bar examiners try to trick you with substitute performance versus substitute parties. That’s two more points in your column on exam day.