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  • Writer's picturePeter Lamont, Esq.

Account Stated Claims | Getting Paid |Small Business Law

Small businesses often find themselves in situations where clients owe money for goods or services that were provided. Many times, the business does not have a formal contract with the client, only an invoice. In these situations, the business can file a lawsuit for relief under the doctrine of Account Stated. In this post we will explain what an account stated claim is and how to prove it so that your business gets paid.

Account Stated Basics

A cause of action for account stated is a legal claim that can be brought by a business or individual against another business or individual for the amount of money that is allegedly owed pursuant to an open and continuing account. This type of claim arises most commonly when parties have an existing business relationship and have engaged in repeated transactions over time, typically involving the exchange of goods or services for money, and may not have a contract for each transaction. Instead, one party simply sends an invoice to the other.

If the parties subsequently have a dispute over the amount owed, or if the party who received the goods or services fails to pay an invoice, the party who furnished the goods or services can bring a cause of action for account stated to recover the outstanding balance.

The rationale behind the account stated cause of action is that if a party does not dispute an invoice within a reasonable time after receipt, that party has impliedly agreed to the stated amount of the invoice and is therefore liable for payment. Courts find that after a reasonable time, which varies depending on the circumstances, the debtor implicitly agrees to pay the debts by not objecting to the claimed charges.

Breach of Contract v. Account Stated

At first glance, it may seem like a claim for account stated is very similar to a breach of contract claim. However, there are a few significant differences.

First, a breach of contract typically arises when there is an agreement between two or more parties for the exchange of goods or services, and one party fails to live up to their end of the bargain. In contrast, a cause of action for account stated can arise even in the absence of a contract. As noted above, more often than not, an account stated claim is based only on the invoice that was sent from one party to the other.

Second, a cause of action for account stated is typically based on the parties’ past dealings and course of conduct rather than any specific agreement.

Third, to succeed on a claim for account stated, the plaintiff must show that the defendant had notice of the invoiced amount and failed to timely object to it. In contrast, a plaintiff in a breach of contract claim must show that there was a valid contract and that the defendant breached it.

Fourth, a cause of action for account stated is typically limited to the amount set forth in the invoice(s) at issue, plus any interest that may have accrued. In contrast, a plaintiff in a breach of contract claim may be able to recover damages in excess of the amount set forth in the contract, such as consequential, liquidated, or punitive damages.

Elements of an Account Stated Claim

The specifics of the cause of action vary by state, but generally, the parties must have previously conducted similar transactions and the debtor accepted or implicitly agreed to pay the debt. Some states require the the plaintiff to prove the following elements:

1) an agreement between the parties, either express or implied, to keep an open account;

2) the receipt and acceptance by the defendant of goods or services from the plaintiff;

3) the defendant's knowledge, or reason to know, that the plaintiff expected to be paid for the goods or services received; and

4) the defendant's failure to pay the amount owed within a reasonable time after receiving a demand for payment.

If the plaintiff can prove these elements, the court will then determine the amount of money owed based on the terms of the parties' agreement or the invoice.

Statue of Limitations

Like all causes of action, account stated claims are governed by specific state stuate of limitations. This means that there is a time limit within which the plaintiff must bring their claim, or else they will be forever barred from doing so. The length of the statute of limitations varies from state to state, but is typically between two and six years. In New Jersey, the statute of limitations for a claim for account stated is six years (N.J. Stat. Ann . 2A:14-1); Pagano v. United Jersey Bank, 648 A.2d 269, 272 (N.J. Super. Ct. App. Div. 1994)).

Defenses to Account Stated Claims

There are defenses to an account stated claim that a debtor can assert, such as:

1) the account was never agreed to by the parties;

2) the account is incorrect;

3) payments were made on the account;

4) the statute of limitations has expired; or

5) the agreement to pay was procured through fraud or mistake.


If you have been served with a complaint for account stated, or if you are considering bringing such a claim, it is important to consult with an experienced business attorney to discuss your options and ensure that you are taking all the necessary steps to protect your rights.

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If you would like more information about this post or if you want to discuss your legal matter with an attorney at the Law Offices of Peter J. Lamont, please contact me at or at (201) 904-2211. Don't forget to check out and subscribe to our podcast and YouTube channel. We have hundreds of podcasts and videos concerning a variety of business and legal topics. I look forward to answering any questions that you might have.

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As with any legal issue, it is important that you obtain competent legal counsel before making any decisions about how to respond to a subpoena or whether to challenge one - even if you believe that compliance is not required. Because each situation is different, it may be impossible for this article to address all issues raised by every situation encountered in responding to a subpoena. The information below can give you guidance regarding some common issues related to subpoenas, but you should consult with an attorney before taking any actions (or refraining from acts) based on these suggestions. Separately, this post will focus on New Jersey law. If you receive a subpoena in a state other than New Jersey you should immediately seek the advice of an attorney in your state as certain rules differ in other states.


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