An account stated is a legal declaration between creditor and debtor indicating that the debtor owes a set sum within a given period of time, on the basis of prior transactions that establish a business relationship. If the debtor does not object to the account stated within a reasonable period of time, it is considered a legal obligation. Failure to pay can be grounds for suit and other legal actions and may expose the debtor to consequences like a black mark on the credit record.
A classic example is a bank statement. A bank may send a monthly statement to a customer who has entered a business relationship with the bank by establishing an account, placing funds on deposit, and using bank services like a debit card. The customer has an opportunity to review the statement and identify any errors or misstatements. If the customer does not draw these to the attention of the bank to correct them, the account is accepted as stated and the customer cannot retroactively argue about something on the statement.
The definition of a “reasonable period of time” in regards to an account stated and other legal matters can be nebulous and variable. With something like a bank statement, for instance, a jury might assume that a customer would be able to respond to a problem within a month, before the next month's statement arrives. In a situation where a statement is misdirected, a longer period of time might be considered reasonable, to give the debtor a chance to learn that the statement hasn't arrived and request a new copy.
When a debtor accepts an account stated by either paying the amount or failing to challenge the declarations, that person takes responsibility for the financial liabilities listed on the statement. If the debtor does not pay by the due date, the creditor can take collection actions. These typically occur on an escalating scale that may start with a simple phone call to remind the debtor and could end with pressing suit in court to recover the debt. The court can also order damages to compensate the creditor for the costs of collection.
It is important to review financial statements and declarations with care, and to discuss any errors as soon as they are identified to avoid being trapped with an erroneous account stated. Debtors should also be alert to the usual time frame in which account statements tend to arrive. If a statement is late or does not arrive, a new copy should be requested. The debtor may also want to ask the creditor to check records to make sure the debtor's address is correctly listed.