Legal Definitions - stated account

A stated account, also known as an account stated, is a legal concept where two parties who have had previous financial dealings agree, either explicitly or implicitly, on the final balance owed by one to the other. This agreement simplifies the process of collecting a debt because it establishes that both parties acknowledge the correctness of the amount due, removing the need to prove each individual transaction that led to that balance.

Here are some examples illustrating a stated account:

• Example 1: Freelance Design Services

  A freelance graphic designer completes a branding project for a new startup company. After the work is delivered, the designer sends a detailed invoice outlining all hours worked, materials used, and the total project cost. The startup's CEO reviews the invoice, finds no discrepancies, and replies via email, "Thanks for the invoice, the total looks correct. We'll process payment by the end of the week."

  Explanation: This creates a stated account because the graphic designer presented a summary of the financial dealings (the invoice), and the startup's CEO explicitly agreed to the final balance, acknowledging the debt owed.

• Example 2: Monthly Utility Bill

  A homeowner receives a monthly electricity bill from their utility provider. The bill itemizes usage, charges, and any outstanding balance from previous months, clearly stating the total amount due. The homeowner reviews the bill and, without raising any objections or disputes, pays the full amount by the due date for several consecutive months.

  Explanation: By consistently receiving and paying the monthly utility bills without dispute over a reasonable period, the homeowner implicitly agrees to the accuracy of the financial summary provided by the utility company. This implied agreement forms a stated account for each month's balance.

• Example 3: Business-to-Business Supply Agreement

  A restaurant regularly purchases fresh seafood from a local distributor. At the end of each month, the distributor sends a comprehensive statement summarizing all deliveries, quantities, prices, and payments received, showing a remaining balance due from the restaurant. The restaurant's accounting department receives this statement, reconciles it with their own purchase orders, and then issues a check for the exact amount stated on the distributor's invoice without any objection or negotiation.

  Explanation: The distributor presented a clear summary of their ongoing financial relationship. The restaurant's action of reviewing the statement and then paying the exact balance without dispute demonstrates an implied agreement to the correctness of the stated account.