Commercial Division Blog
Account Stated Theory Provides Basis For Defense Based on Payment of Stated Account
On April 9, 2020, Justice Sherwood of the New York County Commercial Division issued a decision in ATSCO Footwear Holdings, LLC v. KBG, LLC, 2020 NY Slip Op. 30931(U), holding that an account stated theory provided the basis for a defense based on payment of an account as billed, explaining:
An account stated is an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due. The agreement can be express, or may be implied where a defendant retains bills without objecting to them within a reasonable period of time, or makes partial payment on the account. Receipt and retention of plaintiff's accounts, without objection within a reasonable time, and agreement to pay a portion of the indebtedness, gives rise to an actionable account stated, thereby entitling plaintiff to summary judgment in its favor. While it is usually used to require payment of an undisputed demand, KBG argues it works in the reverse, as well. KBG provided an account statement of what Atsco was owed, and Atsco did not contest it, in fact, agreeing to it. Atsco accepted payment. Therefore, Atsco has agreed to the amount of the debt.
(Internal quotations and citations omitted).
People sometimes are surprised to learn that if they do not complain about a bill they receive, they can be found to have agreed to it. And, as this decision shows, the reverse also is true. If you bill someone and they pay, that could be found to be an agreement on the amount owed. Contact Schlam Stone & Dolan partner John Lundin at firstname.lastname@example.org if you or a client have questions about a claim based on un-objected-to invoices or payments.