The Settlement of Accounts and Striking of a Balance Between Parties—What It Consists Of.

Upon merchandise accounts which embrace many items or cover transactions running through a long period it is often wise to strike a balance or to bring about an agreement between the creditor and debtor as to the exact amount owing thereon. The value of such arrangement becomes of great moment when at a later date attempt is made to enforce collection of the account. It obviates the necessity proving various material matters such as the delivery of the various items charged to the debtor; that they were accepted by the debtor; that they were of the kind called for by the contract of sale; that there was a full number or count; that the agreed prices were as charged. The fixing of a balance upon a running account is legally known as the stating of an account and an account so fixed is an “account stated.”

A running account becomes an “account stated” by agreement either express, or implied by acquiesence, between the parties, that a definite amount or sum is owing from one to the other. No particular form of words is essential and neither must it be in writing, although a written expression is of more ready proof and, therefore, preferable. An express admission, either verbally or by letter, of the correctness of an account constitutes an account stated.—(Vernon v. Simmons, 7 N. Y. Supp. 649.)

In the above case the debtor retained accounts received from his creditor without objection or replying and subsequently acknowledged orally the receipt of the letter containing them and promising to pay later on, and it was held that the creditor could sue upon an account stated. It is not necessary that the account should be signed by the parties to make it an account stated. It is enough that it has been examined and accepted by the party and this acceptance need not be expressed; it may be implied from circumstances such as keeping it without objection beyond a reasonable time. As to what is an unreasonable time depends on circumstances largely and it has been held that two months was sufficient, although generally a longer time would be more conclusive. This acquiesence, however, may be explained by the debtor, which would nullify the apparent acceptance, but without such satisfactory explanation the situation is prima facie against him. Where the indebtedness has been expressly denied, the retention of the account does not bind the debtor.—(Austin v. Wilson, 11 N. Y. Supp. 565.)

In bringing an action on an account stated if the plaintiff is defeated through failure to prove the agreement as to the amount or the fact that an “account was stated;” he would not be debarred from bringing another action to recover for the various items comprising the account.

Opinion No. 101.