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"Account Stated" Claims in Minnesota

Posted by Christopher A. Jensen | Jun 11, 2020 | 0 Comments

Photo by Tom Phan on Unsplash

When businesses have existing customer relationships, their invoices are often the only written evidence of a contract. If the customer fails to pay the invoice, what can the business do?

The business may have a breach-of-contract claim. But another legal theory the business could use is an “account stated” claim, where the invoice amount is deemed valid because the customer failed to object to it.

This article looks at “account stated” claims in Minnesota and how the theory fits into the lawyer's “toolbox”.

The Basics of "Account Stated"

“Account stated” is a legal theory used in a Minnesota civil lawsuit to recover money from another person. Credit card companies and banks often use account-stated claims against consumers in court.

The doctrine of account stated is an alternative to a breach-of-contract claim for establishing liability on a debt. Am. Druggists Ins. v. Thompson Lumber Co., 349 N.W.2d 569, 573 (Minn. Ct. App. 1984).

Under the doctrine of account stated, “if one party renders a statement of account to the other party, and that other party retains the accounting for an unreasonably long time without objecting to it, then the party is deemed to have assented to that accounting.” Toyota-Lift of Minn., Inc. v. Am. Warehouse Sys., L.L.C., 868 N.W.2d 689, 698 (Minn. Ct. App. 2015), aff'd, 886 N.W.2d 208 (Minn. 2016). The rationale is that the parties have “mutually examined each other's claims and reached a mutual agreement as to the correctness of the balance.” Id. 

An account stated is “prima facie” evidence of the debtor's liability. Erickson v. Gen. United Life Ins. Co., 256 N.W.2d 255, 259 (Minn. 1977). Account stated is basically an implied promise to pay the balanced owed. Meagher v. Kavli, 251 Minn. 477, 487, 88 N.W.2d 871, 879 (1958).

Account-Stated Claims – Legal Standards

An account-stated claim requires a plaintiff to show three things:

(1) a prior relationship as debtor and creditor,
(2) a showing of mutual assent between the parties as to the correct balance of the account, and
(3) a promise by the debtor to pay the balance of the account.

Mountain Peaks Fin. Servs., Inc. v. Roth-Steffen, 778 N.W.2d 380, 387 (Minn. Ct. App. 2010), review denied (Minn. Apr. 28, 2010).

While not required, partial payments on the account without objection may “strengthen the inference” that an account stated exists. 1A C.J.S. Account Stated § 35 (2016).

Knowledge of an Account

Merely sending an invoice to a debtor does not establish an account stated. W. Newspaper Union v. Segerstrom Piano Mfg. Co., 118 Minn. 230, 236, 136 N.W. 752, 754 (1912). Generally, a debtor needs to see and examine the amount due before the debtor's assent can be implied. Hall-Vesole Co. v. Durkee-Atwood Co., 227 Minn. 379, 384, 35 N.W.2d 601, 604 (1949). 

When the person was not aware of the account when the debt was incurred, it is unlikely that an account stated claim could be proved. See, e.g., Manderfeld v. Krovitz, 539 N.W.2d 802, 806 (Minn. Ct. App. 1995), review denied (Minn. Jan. 25, 1996) (finding that one could not be bound to a contract to which one “was not a party, was not aware of at the time of its making, and to which [one] has not been shown to have consented”).

For example, if a client was only aware of a basic fee, other unknown fees may not be valid grounds for an account-stated claim. Roehrdanz v. Schlink, 368 N.W.2d 409, 412 (Minn. Ct. App. 1985).

Similarly, credit card companies that rely on a cardmember agreement must generally provide it to the person. See, e.g., In re Brown, 403 B.R. 1 (Bankr. E.D. Ark. 2009). If such an agreement is not sent, it may be difficult for the plaintiff to prove a breach of contract or an account stated.

Form of Objection

A question may come up as to whether the defendant's form of objection was sufficient. For example, telling the creditor that the debtor lacks the money to pay the invoice is not viewed as a valid objection to the amount of the invoice. Kenyon Co. v. Johnson, 144 Minn. 48, 50-51, 174 N.W. 436, 437 (1919). Also, general billing complaints may not be enough to be a valid objection; the person may need to specifically object to the correctness of the amount. Id.; Lampert Lumber Co. v. Ram Constr., 413 N.W.2d 878, 883 (Minn. Ct. App. 1987).

Timing of Objection

A person must generally object to the invoice within a “reasonable time” under the circumstances. For purposes of illustration, an unpublished case from the Minnesota Court of Appeals said that relevant factors may include:

the nature of the transaction, the relation of the parties, the parties' distance from each other and the means of communication between them, and the parties' business capacity, intelligence, and the usual course of their business.

Faegre & Benson, LLP v. Lee, No. A10-852 (Minn. App. Dec. 28, 2010) (quoting 1 Am. Jur. 2d Accounts & Accounting § 40 (2005)).

As such, there may not be a clear rule on when to object. However, the more time that passes without an objection from the customer will strengthen the plaintiff's claim.


A defendant may argue, among other things, that there was no existing legal arrangement and no agreement to pay the plaintiff.

Also, courts have said that once an account stated is established, it “may be impeached for mistake or error in law or in fact with respect to the items included in it, or for omission of items.” Meagher v. Kavli, 251 Minn. 477, 489, 88 N.W.2d 871, 880 (1958). Generally, the available defenses to an account stated are limited to fraud or mistakeSee Behrens v. Kruse, 132 Minn. 69, 72, 155 N.W. 1065, 1067 (1916) (explaining that an account stated “can be . . . set aside only on the ground of fraud or mistake”).

A defendant may also raise any affirmative defenses or general defenses that may apply.

Statute of Limitations

Since an account-stated claim does not have a specific statute of limitations, there have been disputes over the applicable deadline for bringing such a claim. See Trebelhorn v. Agrawal, 905 N.W.2d 237 (Minn. Ct. App. 2017).

An account-stated claim is similar to a breach-of-contract claim in nature, so a court may rely on the applicable statute of limitations for a contract claim. Generally, breach-of-contract claims have a 6-year statute of limitations under Minn. Stat. § 541.05, subd. 1.

When the case involves the “sale of goods”, the Uniform Commercial Code (UCC) generally applies. The UCC has a 4-year statute of limitations under Minn. Stat. § 336.2-725(1).

When the case involves a mix of goods and services, a court may have to figure out the predominant purpose of the arrangement. Courts have use the “predominant factor” test to determine whether a contract that involves both services and goods is governed by the UCC. Valley Farmers' Elevator v. Lindsay Bros. Co., 398 N.W.2d 553, 555-56 (Minn. 1987), overruled on other grounds by Hapka v. Paquin Farms, 458 N.W.2d 683 (Minn. 1990). If the “substantial or predominant purpose of the contract” is the sale of goods, the transaction is governed by the UCC. Id. “'Goods' means all things . . . which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid.” Minn. Stat. § 336.2-105.

Account-Stated Clauses in Contracts

There is not a universal contract clause that provides for account-stated claims. Certainly, the parties could include detailed language in their contract to address any invoicing requirements.

For example, parties might provide that invoices be paid within 30 days and any objections made within those 30 days or else the amount is assumed to be correct. This type of contract language may set the parties' expectations, provide a basis for a later breach-of-contract claim, and may increase the chance of having a successful account-stated claim.

Account Stated vs. Breach of Contract

An account-stated claim is similar to a breach-of-contract claim. An account stated is much like an implied contract, but it also functions like a rule of evidence. Where appropriate, parties usually raise both legal theories. The same circumstances could be both a breach of contract and an account stated.

Account stated may not be needed if the person could prove an ordinary breach-of-contract claim. For example, a breach-of-contract claim requires a plaintiff to show:  

(1) the formation of a contract,
(2) the performance of conditions precedent by the plaintiff, and
(3) the breach of the contract by the defendant.

Thomas B. Olson & Assocs., P.A. v. Leffert, Jay & Polglaze, P.A., 756 N.W.2d 907, 918 (Minn. Ct. App. 2008), review denied (Minn. Jan. 20, 2009).

An account-stated claim requires a prior relationship between the parties, but it does not specifically require proof of a prior contract. In a way, account stated is relieving the plaintiff of having to show the original contract. As such, account stated may be easier to prove.

The takeaway is that a breach-of-contract claims relate to a wide variety of oral or written contracts, while account-stated claims apply to a narrower set of cases (i.e., those where the person relies on invoicing). Where appropriate, parties should consider both theories of recovery.

Account-Stated Claims in Various Contexts

Account stated claims can arise in many contexts, including those listed below.

  • Commercial Contracts: Businesses commonly have repeat customers and invoice them, rather than signing a formal contract for every transaction. Account-stated claims will likely apply in these situations. Where the UCC governs “goods” contracts, there may also be statutory rules about rejecting non-conforming goods or addressing invoice-type issues.
  • Construction: It is very common for construction suppliers, subcontractors, and contractors to have ongoing business relationships and to invoice each other. Account-stated claims may be available for those business-to-business invoices. The claim could also apply to unpaid customer invoices, along with breach-of-contract and potential mechanic's lien claims.
  • Real Estate Contracts: Account-stated issues are less likely to come up in the real estate context because these situations generally involve formal written contracts (i.e., to satisfy the Statute of Frauds).
  • Residential and Commercial Leases: A landlord may try to raise an account-stated claim if it invoices a tenant that fails to pay. These situations often involve a written lease and there may be specific eviction laws that will apply to the situation. As such, there may be a lesser need to use an account-stated claim for a landlord to establish liability for unpaid rent.
  • Loans: It may be difficult to apply an account-stated claim to a traditional loan situation. There is generally a written promissory note and security agreement (or mortgage) that will involve a breach-of-contract claim or foreclosure. Courts have also signaled that the account-stated theory may not apply to credit agreement (Minn. Stat. § 513.33) situations.

Legal Theories Related to Account Stated

An account-stated claim is one of many tools in the lawyer's “toolbox.” Here are some other theories that may come up in these cases.

Breach of Contract

As discussed above, a claim for breach of contract is often the primary theory relied on by a party to recover money from another person. Generally, the claim can be based upon a written contract or an oral contract.

For “goods” contracts, the Uniform Commercial Code (UCC) gives “merchants” more flexibility in how contracts are formed. For example, there are rules involving “battle of the forms” situations parties must sort out which terms became part of the final contract.

Regardless of the type of contract, a breach-of-contract if often the primary theory, while the account-stated claim is a viable alternative theory.

Note that with the account-stated claim the underlying contract could potentially be a verbal contract. There is a rule called the Statute of Frauds that requires certain contracts to be in writing to be enforceable (see Minn. Stat. § 513.01). However, most invoicing situations do not involve the type of contracts that must be in writing (contracts that take 1+ year to perform, certain guaranties, contracts related to marriage, debt discharged by bankruptcy, etc.). There may also be an argument that the invoice is written evidence of a contract, so the arrangement is not purely based on an oral contract.

Unjust Enrichment

An account-stated claim is somewhat similar to a claim for “unjust enrichment.”

“Unjust enrichment” is a theory often used when claims for breach-of-contract are unavailable or unsuccessful. “Unjust enrichment is an equitable doctrine that allows a plaintiff to recover a benefit conferred upon a defendant when retention of the benefit is not legally justifiable.Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 838 (Minn. 2012). The Caldas court summarized the requirements:

To establish an unjust enrichment claim, the claimant must show that the defendant has knowingly received or obtained something of value for which the defendant in equity and good conscience should pay. Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally or unlawfully.

Since unjust enrichment is an “equitable” theory, it is not available when there is an adequate remedy at law. ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d 302, 305 (Minn. 1996). Account stated is generally a remedy at law, so the party generally must pursue account-stated or breach-of-contract as the primary theories. 


Account-stated claims are more clear when the parties have an existing arrangement. If there is not a clear legal relationship between the parties but there is a promise, then the party may use “promissory estoppel” as a theory of recovery.

“Promissory estoppel is the name applied to a contract implied in law where no contract exists in fact.” Del Hayes & Sons, Inc. v. Mitchell, 304 Minn. 275, 283, 230 N.W.2d 588, 593 (1975). To establish a promissory estoppel claim, a plaintiff must show these elements:

1) a clear and definite promise was made,
2) the promisor intended to induce reliance and the promisee in fact relied to his or her detriment, and
3) the promise must be enforced to prevent injustice. 

Martens v. Minnesota Mining & Mfg. Co., 616 N.W.2d 732, 746 (Minn. 2000).

The party making the promise can be “estopped” from denying the arrangement. In other words, the court can treat the situation as if there was a contract. For this reason, estoppel is sometimes called a “quasi contract”. It may be a viable theory when the person sending the invoice relied on the other person's promise to pay for the product or services.


When a person receives an invoice and does not dispute it, the account-stated theory says that the person is agreeing that the amount is correct. This account-stated rationale is similar to the doctrine of “waiver”.

Waiver is the voluntary and intentional relinquishment of a known right.” Ill. Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792, 798 (Minn. 2004). Basically, the person “had full knowledge of the facts and his or her legal rights, and intended to relinquish these rights.” Carpenter v. Vreeman, 409 N.W.2d 258, 262 (Minn. Ct. App. 1987).

When a person sues for breach-of-contract, that person may argue that the other party failed to object to the invoice and “waived” a contractual right to object. In other words, the person receiving the invoice was required to pay it per the contract.

Modification or Cancellation of Contract

The rationale of account-stated claims is that they are consistent with the parties' earlier arrangements, so the invoices should be paid.

If the invoice was different than the parties' earlier arrangements, then it may be hard to win an account-stated claim. But further, there is a question of whether the parties modified (or even abandoned or cancelled) their earlier contract. The answer may turn on a “no oral modifications” clause or similar requirement in the parties' initial contract. There also may be dispute about whether one party waived the right to require a written modification.

These arguments would likely come up within the breach-of-contract claim. But it also raises a question on the account-stated theory of “why should the invoice be upheld if it was different than the parties' initial arrangement”?

Reformation and Rescission

When parties have confusion and disagreement over the invoice at the center of an account-stated claim, they may have other available theories such as “reformation” and “rescission.”

If the parties have strayed from the initial arrangement because they were mistaken about the original terms, they may assert an equitable claim for “reformation”. Reformation “is available when a party seeks to alter or amend language in a contract so that the contract reflects the parties' true intent when they entered into the contract.” SCI Minn. Funeral Servs., Inc. v. Washburn-McReavy Funeral Corp., 795 N.W.2d 855, 864 (Minn. 2011).

If there was significant confusion about important terms of the contract, a party defending a breach-of-contract claim may raise a “rescission” argument. Rescission is a court-ordered termination of a contract, generally due to a formation problem. A contract may be rescinded if “both parties were mistaken with respect to facts material to the agreement.” Id. at 861 (quotation omitted).

These theories are more related to breach-of-contract claims but, as mentioned above, could be an option for parties involved in account-stated disputes.

Practical Suggestions for Account-Stated Issues

  • A formal contract, rather than a simple invoice, may be more suitable for high-value contracts.
  • A formal contract may be important for the initial dealings between parties. Later transactions may be more appropriate for invoicing.
  • Make sure the invoices are supported by a prior contract, arrangement, or promises.
  • Agree on proper method of sending invoices and establish a proper address where the invoices can be received. It may seem trivial, but when the other party does not receive the invoice there is potential for a dispute.
  • If the parties want specific rules regarding invoicing, they should include those terms in a contract.
  • For a person receiving an invoice, promptly review it for purposes of accuracy and raise any objection (or a polite communication) with the other party.
  • Review the invoice to determine if it is consistent with your initial arrangements with the other party. If the invoice is not consistent, communicate with the other party to figure out if it was a mistake or whether a modification of the agreement is being sought.
  • If you bring a lawsuit, consider bringing an account-stated claim in addition to a breach-of-contract claim and other theories.
  • Be aware that a simple invoice could be interpreted as a valid basis to recover money.

Note:  These are practical suggestions that may help people, but they are not meant to be a substitute for legal advice.


Account-stated can be a viable theory of recovery when a party receives an invoice and does not raise a timely objection. In some ways, it can be easier to prove than a breach-of-contract claim. 

But account-stated claims still require evidence of a prior arrangement, so the plaintiff must be prepared to prove his or her claim.

The takeaway is that parties must be aware that invoicing can establish a basis to recover on a breach-of-contract claim and an account-stated claim.

If you need legal advice or representation on an contract dispute, Contact Us for a free consultationWith offices in Shakopee (Scott County) and Litchfield (Meeker County), we serve clients throughout the Twin Cities and Greater Minnesota.

About the Author

Christopher A. Jensen

About Chris Jensen  Chris Jensen is an experienced litigation attorney that has successfully handled civil lawsuits in state, federal, administrative, and appellate courts.  He has been honored as a Rising Star attorney, which is a distinction awarded to less than 2.5% of attorneys.  He is not a...


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