Account stated

Under United States law, account stated is a statement between a creditor (the person to whom money is owed) and a debtor (the person who owes) based upon a series of prior transactions that a particular amount is owed to the creditor as of a certain date. Often the account stated is a bill, invoice or a summary of invoices, signed by the customer or sent to the customer who pays part or all of it without protest.

An account stated may also be established when the debtor retains the statement of account (for example the bill or invoice) without objecting, for a reasonable length of time. "Reasonable" is determined by looking at the surrounding circumstances. An account stated is in the nature of a kind of settlement between the parties, such as when a person receives a bank statement, is capable and even obligated to check the math within a specified period of time, otherwise the account as between the parties is thus "stated." The key element is either the express agreement or an agreement implied by law under all the facts and circumstances.

Arthur Corbin's influential treatise on Contracts explains the purpose and historic context of "account stated" as follows:

Persons who carry on business with each other often have a series of transactions constituting an open running account with various items of debit and credit. For long periods neither one may know which one is actually indebted to the other. Under such circumstances, they may get together and compare their books and their memories, cast up their mutual accounts, and strike a balance. In Latin phrase, they were formerly said to have accounted together—insimul computassent. Assumpsit lay for the recovery of the balance so found due, before the development of many of the principles of present-day contract law. Common illustrations of such accounts, with recurring debits and credits, are those between banker and depositor, between customer and grocer or department store, between principal and agent, and between partners in business. In all such cases, if the items are liquidated in money, one of the parties is a debtor to the other in an amount that can be determined at any time by an accounting process. The amount of the debt is the balance of debits over credits. The debt becomes due and payable only as the parties may have agreed;  this may be in installments or as a whole, at regular intervals or as demanded by the presentation of drafts or statements of account."

The elements of account stated are: (1) prior transactions between the parties which establish a debtor-creditor relationship; (2)an express or implied agreement between the parties as to the amount due; and (3) an express or implied promise from the debtor to pay the amount due.

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