COLLECTING ACCOUNTS WITH NUMEROUS TRANSACTIONS
by Raymond Pater

Clients sometimes ask: "How are we going to prove all these separate individual purchases when we don't have any independent recollection of each separate transaction?"

Creditors are helped by a statute that provides that a creditor does not have to prove each separate purchase, only that the debtor was presented with a copy of an account and the debtor failed to object to the account's inaccuracy thereby creating an account stated. It then becomes an implied agreement, between parties who have had previous transactions of a monetary character, that the account representing such transactions are true and that a balance struck is correct, together with a promise, expressed or implied, for payment of the balance. Leonard Refineries, Inc. v. Gregory, 295 Mich 432 (1940). The essential element is a statement of account, or a striking of a balance between the parties on a settlement.

The theory of an account stated is that the minds of the parties have met when an account has been rendered by one and received and accepted without objection by the other. Love v. Ramsey, 139 Mich. 47 (1905). An account may be stated between any parties who have had previous transactions, or even a single transaction of a monetary character. Thomasma v. Carpenter, 175 Mich. 428 (1913). However, there must have been a prior dealing between the parties that resulted in an antecedent debt or demand between the parties concerning which a balance is struck. Fellows v. Thrall, 85 Mich. 161 (1891). If there has been a balance struck between the parties on the settlement, the nature of the original transaction is generally immaterial. Albrecht v. Gies, 33 Mich. 389 (1876). It may have been for the sale of land or other property or for services. Stevens v. Tuller, 4 Mich. 387 (1857).

An account stated need not be in any particular form, but it is sufficient if there is disclosed some existing antecedent debt or demand between the parties respecting which a balance was struck. Albrecht v. Gies supra. Typically, it is in the form of a statement of account to a debtor, which the debtor endorses as correct.

The items constituting the account need not be shown. A writing is unnecessary, for a transaction may become an account stated by oral settlement, without any written undertaking or acknowledgment, and may be proved by unsigned writings. Watkins v. Ford, 69 Mich. 357 (1888).

Whether the parties have assented to a sum as the correct balance due from one to the other depends upon the circumstances. Kaunitz v. Wheeler, 344 Mich. 181 (1955). Assent may be shown by an expressed understanding, or by words or acts in the necessary improper references to be drawn from it. Consequently, assent is shown by (1) a debtor's endorsement on a statement of account of its correctness, (2) by giving credit for the amount of the account on a bill rendered by the debtor, or (3) by making payments on the account without objection. Bewick v. Butterfield, 60 Mich. 203 (1886); Corey v. Jaroch, 229 Mich. 313 (1924). It may even arise by failure of a debtor to object within a reasonable time to statements of account rendered to him. Hawley v. Professional Credit Bureau, Inc. 345 Mich. 500 (1956).

An account stated that conforms to the legal requirements may only be impeached for fraud or mistake. The burden of proof is on the one who seeks to impeach an account stated for fraud or mistake.

Contact Raymond Pater to inquire about assistance collecting your accounts receivables.