## Facts

- John G. Ralls sought financing to build and operate a Days Inn motel in Evergreen, Alabama and applied to First Federal for a $600,000 construction loan.
- First Federal issued a written commitment approving a 20-year loan at a 10% interest rate, with the rate guaranteed upon payment of 1% of a 2% service charge; the letter did not state a completion deadline.
- When Ralls met to accept the commitment, he paid $6,000 and First Federal’s officer wrote on the lender’s copy a completion date eight months from the acceptance date and noted the payment as guaranteeing the 10% rate.
- The parties disputed whether the completion date and its consequences were disclosed and agreed to, and whether Ralls was assured that extensions were routinely granted.
- Before the completion date, First Federal informed Ralls it would not extend the 10% rate beyond that date, but would extend time only at the prevailing interest rate at closing.
- After requesting an extension and being told the rate would increase, Ralls closed the loan months later at 12% interest.
- Ralls sued for breach of contract and tort claims, alleging he accepted the 12% loan under economic duress caused by his financial commitments and First Federal’s refusal to honor the 10% terms.

## Issues

1. Whether Ralls’s closing on a 12% loan established an accord and satisfaction as a matter of law.
2. Whether evidence of economic duress and disputed representations created a jury question on whether Ralls’s acceptance of the 12% terms was voluntary.

## Decision

- The Supreme Court of Alabama reversed the directed verdict for First Federal and remanded.
- The court held there was sufficient evidence for a jury to decide whether a valid accord and satisfaction existed.
- The court held the evidence permitted a finding that Ralls’s acceptance of the 12% loan was induced by economic duress, which would defeat the voluntariness required for accord and satisfaction.
- Because material facts and credibility were disputed—especially concerning the completion date and assurances about extensions—the case should not have been taken from the jury.

## Legal Principles

- Accord and satisfaction requires a knowing and voluntary agreement to accept substituted performance in full settlement of a disputed claim.
- Economic duress can negate the voluntariness necessary for an accord and satisfaction when acceptance of new terms results from wrongful or coercive pressure.
- Where evidence on duress, misrepresentation, and the parties’ understanding of material loan terms is conflicting, those questions are generally for the jury.
- A directed verdict is improper when the nonmoving party offers evidence from which a reasonable jury could find for that party on the dispositive issues.

## Conclusion

The court concluded that disputed evidence about the completion-date condition, alleged assurances of extensions, and Ralls’s claimed economic duress could allow a jury to reject First Federal’s accord-and-satisfaction defense; therefore, the directed verdict was erroneous and the case was remanded for jury determination.


Ralls v. First Fed. Sav. & Loan Ass’n of Andalusia, 422 So. 2d 764 (Ala. 1982)