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What is an Account Stated?

Posted by Attorney Stephen Hance | Aug 13, 2014 | 0 Comments

Have you ever billed a customer for services rendered and after invoicing the debt for a period of time, the customer disputes the invoices? Then you look for an agreement and find that there was no written agreement. This is the basic fact setup for the doctrine of “account stated.”

“It is the general rule that an account stated is prima facie evidence of the accuracy and correctness of the items noted therein and of the liability of the party against whom the party refers.” Erickson v. General United Life Ins. Co., 256 N.W.2d 255 (Minn. 1977). In plain English, if you receive a bunch of invoices and you don't challenge them, the courts may presume that the invoices represent a valid debt.

This situation arises frequently in the service industry where, for example, a designer is hired to do some design work and after the work is done, the customer decides the services were not worth the amount of the bill. Here are some lessons businesses should take from the account stated doctrine. First, it is good practice to prepare written invoices if you expect to be paid, and to re-send the invoices if you don't receive payment. Second, if you do not believe an invoice is legitimate, you better protest in writing. Otherwise, you may lose your right to object.

About the Author

Attorney Stephen Hance

Steve represents and advises clients that are dealing with business and real estate disputes. Steve is an investor and business owner, and his approach is unique from other attorneys.

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