Those of you who have been forced to sue, or maybe have been sued, for the price of "goods sold and delivered" may have noticed this type of lawsuit will also usually contain a separate cause of action titled "account stated." While the typical cause of action refers to a contract made to deliver goods at an agreed price, the "account stated" action simply says: (a) A statement of account was sent; (b) There was no objection received, and (c) The money referred to in the account is, in fact, due and payable.

Does this mean because the receiving party failed to object to the "statement of account" he got in the mail, he has become responsible to pay it even in those cases where it may be incorrect? The answer to this question may very well be yes.

In his decision, in a recent case dealing with this question, the judge wrote in detail of the history and present status of this type of lawsuit. The lawsuit in this case was brought by a subcontractor against the general contractor for material and labor supplied to a particular project. The subcontractor's "account stated" claim was based upon invoices sent to the general contractor, which he claimed the general contractor retained without objection. In fact, according to the subcontractor, the general contractor made two payments totaling $11,000 to satisfy the first invoice, and it reduced the second and third invoices—$700 and $2,639, respectively- as an accommodation when the general contractor claimed he was losing money.

The general contractor, on the other hand, claimed his agreement with the subcontractor was a lump sum contract not to exceed $33,242 for material and labor, and the job was to be completed within two weeks. He further stated his $11,000 payment was made "on account" and not in actual payment of the first invoice, which was for less than the $11,000 payment. In addition, the general contractor claimed he paid $28,036.89 on behalf of the subcontractor directly to his material supplier and so, had in fact, already paid more than the agreed upon price for the total job. According to the general contractor, the extra billing was due to the subcontractor forcing more men, for longer hours than originally estimated, in order to complete the job within the agreed upon two-week period.

"As was stated nearly 100 years ago," the judge began after reviewing the above, "an account stated is an account balanced and rendered with an assent to the balance, expressed or implied. The very meaning of an account stated is the parties have come together and agreed upon the balance of indebtedness. Thus, while the mere silence and failure to object to an account stated cannot be construed as an agreement to the correctness of the account, the factual situation attending the particular transactions may be such that in the absence of an objection made within a reasonable time, an implied statement may be found."

The judge further noted that although partial payment of an account may constitute an acknowledgment of the validity of the bill, thereby establishing it as an account stated, evidence of an oral objection to an account rendered is relevant and competent to rebut any inference of an implied agreement to pay the stated amount. In this case, although the general contractor admittedly did not make any written objections to the invoices in question, he did claim to have orally disputed this upon their receipt.

This claim of "oral objections" was enough to prevent the judge from rendering a decision upon the submitted papers. Instead, he found the matter would require a trial and testimony to determine the answer to the factual question of whether the general contractor did orally dispute the correctness of the invoices. If he put it in writing he would not have had this problem.