Accord (Law) – Definition, Basics, and Legal Classification
Definition and Legal Background
The term Accord is significant in various areas of law as well as in economic and labor law practice. In a legal context, the accord primarily describes a settlement or agreement aimed at resolving an existing dispute through compromise or facilitating the settlement of a debt obligation. Accord is especially important in civil law, insolvency law, and labor law.
Legal Sources and Statutory Foundations
Civil Law
In civil law, an accord generally refers to a contractual agreement for settling a dispute through mutual concession. The accord may constitute a settlement (§ 779 BGB), where the parties resolve a dispute or uncertainty regarding a legal relationship by mutually giving way. Typically, the accord is a legally binding contract that leads to the cessation or alteration of rights and obligations.
Insolvency Law
In the context of insolvency law, the accord assumes particular importance. Here, the accord denotes an agreement between the debtor and creditors, in which partial satisfaction of creditors is agreed in exchange for the waiver of remaining claims. The so-called insolvency accord is an important instrument for extrajudicial settlements with creditors, for example within the framework of an insolvency plan (§§ 217 et seq. InsO). A successful insolvency accord can shorten or even avert insolvency proceedings.
Labor Law
In labor law, the term accord is also commonly used, particularly in connection with the pay structure known as ‘piecework wage’ (Akkordlohn). This refers to a performance-based compensation system, where pay is determined by work output. In this context, the accord differs from the legal agreement, even though employment contracts may contain provisions regarding piecework wages.
Types of Accords
Settlement (General Accord and Individual Accord)
In the field of insolvency and restructuring, a distinction is made between the general accord and the individual accord:
- General Accord: An agreement with all creditors, which can be concluded either in statutory insolvency proceedings or out of court. The goal is a comprehensive arrangement of the debtor’s liabilities.
- Individual Accord: An agreement with individual creditors, which may lead to partial or complete debt forgiveness without involving all creditors.
Compulsory Accord
A special case is the compulsory accord, which is particularly well-known in insolvency law. This involves a settlement adopted by the majority of the creditors’ meeting, which also binds dissenting minority creditors. This form of accord is legally regulated by the respective provisions of the Insolvency Code and must be confirmed by the insolvency court.
Formation and Legal Effects
Form and Requirements
An accord generally requires written form, particularly if concluded as part of an insolvency plan or a comparable procedure. The parties involved must expressly consent to the accord, with specific requirements varying according to the type of accord and the relevant legal system. Upon acceptance by the parties involved, the accord constitutes a binding contract.
Legal Consequences
The successful conclusion of an accord regularly leads to the following legal consequences:
- Reduction or waiver of (residual) claim
- Termination of the legal dispute or enforcement proceedings
- Prevention or termination of insolvency proceedings (in the case of insolvency accords)
- Release of the debtor from liability for claims included in the accord
Once an accord has been concluded and has become effective, it is binding and can generally only be rescinded under statutory requirements, such as mistake, misrepresentation, or other grounds for contestation.
Significance in Practice and Case Law
The accord holds considerable importance for both debtors and creditors. For debtors, it offers the opportunity to achieve debt relief and avert insolvency through mutual agreements in times of financial hardship. For creditors, the accord provides a chance to realize at least part of their claims and avoid prolonged, costly proceedings.
Case law regularly addresses the requirements for the validity of accords, such as requirements of form, consent, and the extent of binding effect on third parties. Special attention must be paid to the specific features of insolvency law that deviate from general private autonomy.
Tax Implications of the Accord
In tax law, it should be noted that debt forgiveness under an accord can have tax consequences for the debtor. Waiver of a claim may, under certain conditions, result in taxable income (so-called restructuring gain), although provisions for tax exemption must generally be considered.
Distinction from Related Legal Institutions
The accord must be distinguished from the settlement as an independent legal institution, even though there are overlaps. While a settlement can comprise any out-of-court or court agreement to resolve disputes, the accord usually describes a particular form of settlement in the context of debt arrangements.
Summary
Der Accord is, in the legal sense, a key instrument for both out-of-court and judicial settlements between debtors and creditors. With its diverse forms and respective legal frameworks, it enables flexible solutions for terminating obligations, resolving disputes, and regulating debts. The conclusion of an accord is subject to precise legal requirements and, once established, has binding effect on the parties involved. Particular tax and insolvency law features must be carefully considered when entering into an accord.
Frequently Asked Questions
What legal requirements exist for the conclusion of an accord under German law?
Under German law, an accord generally requires the mutual agreement of the parties involved regarding the final settlement of a dispute or an uncertain legal situation. This agreement must normally specify the essential contents of the accord, especially with regard to the claims involved, the underlying performance, and any counter-performances. The accord does not require any particular form unless statutory formal requirements apply, as is the case in insolvency proceedings (§§ 217 et seq. InsO) for insolvency plans. Furthermore, it is necessary that the parties are capable of entering into an accord at the time of the contract—namely, they are fully legally competent or validly represented. An accord is only legally effective if there are no statutory prohibitions, immorality (§ 138 BGB), or defects of consent (e.g., challenge due to mistake or duress under §§ 119 et seq. BGB).
What are the legal consequences of concluding an accord for the parties involved?
The valid conclusion of an accord constitutes a binding contract between the parties involved. According to the principle of contractual freedom, the parties are bound by the regulations agreed in the accord and cannot derive further legal actions from their original legal relationship regarding the settled claims or disputes. In the case of a settlement in civil proceedings (§ 779 BGB), the right to sue for the originally disputed claims lapses. In the case of an insolvency accord, the creditors’ claims are modified, reduced, or deferred as agreed; claims not covered by the accord remain unaffected. Breaches of the accord can lead to claims for damages or enforcement of the original claim, depending on the agreements made and statutory provisions.
What special features apply to the accord in insolvency proceedings?
In German insolvency law, an accord often refers to the so-called insolvency plan accord (§§ 217 et seq. InsO), by which creditors and debtor agree, as part of the insolvency proceedings, on arrangements deviating from the statutory provisions for satisfying creditors. The insolvency plan, i.e., the accord, must be confirmed by the creditors’ meeting as well as the insolvency court (plan confirmation order). The plan accord thus becomes legally binding only when the required majorities of creditors approve this solution and the court confirms the plan. Furthermore, the special feature applies that the insolvency plan accord can also be binding on dissenting creditors and subordinated claims, provided that the statutory majorities and requirements are met. This fundamentally distinguishes the insolvency accord from the purely civil law settlement, which only has effect among the consenting parties.
What are the legal effects if individual creditors refuse to conclude an accord?
If individual creditors withhold consent to an out-of-court accord or settlement, the accord basically binds only those parties who expressly agree. Creditors who do not consent can continue to insist on their full claims. In insolvency proceedings, the situation is different: here, under certain circumstances, the insolvency plan accord can become binding on all creditors even if some refuse to consent, provided the statutory majorities are reached and the plan is confirmed by the insolvency court (§ 244 InsO – ‘majority principle’). Minority interests are then protected by specially regulated safeguards such as the prohibition of worse-offs (§ 245 InsO).
Can an accord contract be contested or revoked afterwards?
An already concluded accord contract can be legally contested under certain conditions, particularly if one of the statutory grounds for contestation (e.g., fraudulent misrepresentation, duress, mistake under §§ 119 et seq. BGB) exists. In these cases, successful contestation renders the underlying legal transaction of the accord void. As a rule, there is no general right of withdrawal unless such is expressly stipulated in the contract or provided for by law (as is the case, for example, with consumer contracts in distance selling law). However, the restrictions for contestation and withdrawal are significantly stricter in the case of an insolvency accord due to the court’s confirmation and special protective provisions; subsequent termination is only possible in the legally prescribed cases (e.g., due to plan ineffectiveness).
What obligations derive for debtors and creditors from an accord contract?
For the debtor, a legally effective accord contract primarily results in the obligation to provide the services agreed in the accord—be it in the form of a lump-sum payment, partial payment, or other measures regulated in the accord. In return, the creditors fully or partially waive their claims or agree to deferment. Both parties are bound by the agreed arrangements: creditors are obliged to refrain from further legal actions based on the original claim as long as the accord conditions are observed. If there are breaches of accord obligations, the other contractual parties may either sue for performance or—depending on contract terms—reassert the original claim.
How is an accord contract legally enforced?
The legal enforcement of an accord contract follows the general principles of civil law. If a service agreed in the accord contract is not performed, the contractual partner has the usual contractual rights, such as performance or, if applicable, damages for non-performance (§ 280 BGB). If there is an enforceable title (for example, in the case of a settlement recorded by a court per § 794 ZPO), compulsory enforcement can be initiated directly. If the accord contract includes a judicial insolvency plan, the special enforcement and contestation rights of insolvency law also apply, making the plan binding and enforceable for all parties involved.
