The Account Stated - A Useful Legal Tool for Creditors

American Express Centurion Bank v. Gabay, 94 AD 3d 795 - NY: Appellate Div., 2nd Dept. 2012 - Google Scholar:


A creditor can often pursue payment on many theories. One of the most useful is the account stated. An account stated requires the creditor to show that there was a history of transactions and that the conduct of the debtor demonstrates that the debtor did not dispute the balance due. The advantage of account stated is that it avoids the defense to a breach of contract action that the goods or services were inferior. The other advantage is that a lawsuit based on an account stated can rely on the debtor's failure to challenge invoices as proof that the invoices stated the correct amounts.


This is some language from a New York case that sets out the requirements for an account stated:


"An account stated is an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due" (Fleetwood Agency, Inc. v Verde Elec. Corp., 85 AD3d 850, 851 [2011][internal quotation marks omitted]). "An agreement may be implied where a defendant retains bills without objecting to them within a reasonable period of time, or makes partial payment on the account" (American Express Centurion Bank v Cutler, 81 AD3d 761, 762 [2011])."


Comment: if you have series of uncontested invoices and no real defense to payment the account stated is often the legal theory of choice. However, if the debtor complained promptly or contested the invoices, the account stated theory will not work. The best alternative is a breach of contract claim.
Edward X. Clinton, Jr.

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