Account Stated Law and Legal Definition
In the U.S., account stated is a statement between a creditor and a debtor based upon a series of prior transactions. Hence, an account stated arises when a particular amount is owed to the creditor by the debtor as of a certain date. An account stated refers to either an agreement itself or to the assent giving rise to the agreement. The agreement to pay the balance amount can be either express or implied. When the agreement to pay is in the nature of a computation, then it is called account stated.
The account stated often takes the form of a bill, invoice or a summary of invoices, signed by the customer or sent to the customer. Any bill or invoice retained by a debtor without objection for an unreasonable period of time is called an account stated.
The elements of account stated are:
(1) prior transactions establishing a debtor-creditor relationship between the parties;
(2) an express or implied agreement between the parties as to the amount due; and
(3) an express or implied promise to pay the amount due by the debtor.
In Rehmann v. Balduchi, 169 N.W.2d 894 (Iowa 1969), an account stated has been defined as ‘an agreement between parties who have had previous transactions of a monetary character that all the items of the account representing such transactions, and the balance struck, are correct, together with a promise, express or implied, for the payment of such balance’. It must show that there is a balance due, the amount of that balance, and from whom it is due. The doctrine of accounts stated now generally extends to all cases where the relation of debtor and creditor exist. Its importance lies in the fact that it imputes to the apparent debtor an admission of liability for the amount of the balance against him and an actionable promise to pay it.