What exactly is an Account Stated? Today's blog post explains it for you.
Account stated is a statement/agreement between a creditor (the person to whom money is owed) and debtor (the person who owes) that settles the total amount of debt to the creditor.
The account becomes stated when:
- The debtor has not made any objections to the existence of debt and amount owed to the creditor.
- A debtor signed a document agreeing to pay the creditor.
- The debtor made regular payments of debt without any protest.
Elements of account stated are:
- Prior transactions establishing a debtor-creditor relationship between the parties;
- An express or implied agreement between the parties as to the amount due;
- An express or implied promise to pay the amount due by the debtor.
The agreement can be laid out in a bill, credit card statement, invoice or series of invoices.
Advantages of Account stated:
- Easiest way for a plaintiff to declare a contract as “Account stated” as it does not require any signature.
- Cause of action can be ‘account stated’ itself.
An account stated lawsuit may take a longer time to file than some other forms of debt depending on a state.
This type of cause of action fails because the buyer has agreed on the amount due and has no defense to the lawsuit for the required amount.
Proving an account stated depends on:
- the facts;
- that it has taken place,
- may appear by evidence of an express understanding, or
- of words or facts, and the necessary and proper inferences from them.