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Please keep in mind that I cannot give you a complete opinion regarding this matter as cases such as this may involve the analysis of facts outside what can be viewed in a short post such as this one. I will however give you an overview of the law as it applies to your situation.
As you have posted it, Katherine is liable for the full amount. The two of you entered into a written contract in which she agreed to pay you a set amount and you agreed to perform a certain act. The only modification you agreed to was that the check would be sent directly from her mother to your mother (and you did so in writing). The reduction in cash was a material reduction that was done without your consent or acknowledgement. Katherine is liable to you for the difference. (Unfortunately, as a practical matter $450.00 is a relatively small amount to take to Court, even for small claims - but you may still try what some civil litigation attorneys call a "pre-litigation letter" where small claims are presented in a demand letter to the other side with a completed copy of a complaint that is ready to be filed in court if the other side does not pay, you may or may not file at your discretion). Massachusetts Small Claims Court information can be found here: http://www.mass.gov/courts/courtsandjudges/courts/districtcourt/smallclaims.html
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Thank you for help! I am wondering if it matters that my mother was involved. Because it was mother's money, did she have the authority to agree to $1200 instead, or would I still have the authority since the agreement was between katherine and myself?
You and your roommate entered into an agreement, so absent any other facts, your mother would not have the right to interfere or change that contract. However, if your mother was a co-signer on the lease or otherwise involved, that would change things, and the fact that it is your mother's money may be an issue in that case as the actual "parties in interest" may be your mother and your friend's mother. However, the fact that your friend unilaterally changed the agreement (I doubt she presented the real agreement to your mother to be altered), makes it unlikely that she can enforce the lower amount.
(I will mention in passing - you may want to be cautious as you and/or your mother may still be responsible for your portion of the lease liability unless you have also resolved that with the landlord)
Thank you that answers my question perfectly!