Contract “Implied” At Law or Account Stated

From this site and blog posts, you know at least two things:  one, some contracts must be in writing, and two, when you file a law suit for breach of contract, you must attach the contract to the law suit. 

But what if you don’t have the contract to attach?

Can you allege something called a contract “implied at law” or account stated, if there is a regular course of business and running account, like a loan agreement or regular dealings?

 

Contracts “Implied at Law” or Account Stated

The law in this area was explained in the case of CE GLASS v. Ryan, 70 Pa. D. & C. 2d 251 – Pa: Court of Common Pleas, 1975.  There, the plaintiff alleged that four transactions over time created a “contract” based on “account stated.”

The Defendant filed preliminary objections to the breach of contract claim, saying it was not specific enough to state a claim for account stated.  The trial court judge issued an opinion and the following analysis:

“Plaintiff commenced this action against the defendant. . . for goods sold and delivered on an open running book account.” (Emphasis supplied.) Later in the same paragraph an account stated is mentioned. And then every single case cited by plaintiff in its brief deals with actions in assumpsit on an account stated.

Likewise, defendant in his brief in support of the preliminary objections offers similar “ambidexterity.” With regard to the demurrer, defendant speaks to the issue of an account stated. As to its motion for a more specific pleading, it discusses the matter of an open book account.

Only one cause of action is pleaded in the complaint. Where appropriate, causes of action may be pleaded in the alternative, Pa. R.C.P. 1020(c). We also recognize that, where the essential facts exist, an open running book account may be converted into an account stated. However, something more than mere acquiescence by failure to take exception to a series of statements of account received in the mail is required. A “statement of account” in business dealings and an “account stated” in law are not synonymous. Apparently, there were four transactions between the parties over a period of approximately seven months and plaintiff alleges that “it sent defendant statements each and every month for several months.” This is insufficient to establish an account stated.

“An account stated must be based on a subsisting debt, and, it is said, must arise from a pre-existing account or course of dealings between the parties.”: 1 P.L. Encyc., Accounts, §3.

“To produce an account stated, the account must be rendered, and the other party must accept, agree to or acquiesce under such circumstances as to import a promise of payment on the one side and 254*254 acceptance on the other.”: 1 P.L. Encyc., Accounts, §4. (Emphasis supplied.)

Where assent is inferred from the mere lapse of time, the cases indicate that there has also been shown a course of dealing, where the rendering of accounts is an accepted method of adjustment over a period of time and involving an extended series of transactions between the two parties to the suit. See McKinney v. Cump, Inc., 4 Adams 131 (1961).

From the instant complaint, we can only determine that there were four transactions between the parties over a seven-month period and only one statement of account rendered several times. At the very least, it seems that there ought to be an allegation of response(s) by payment or promise of payment to previously rendered accounts when relying on mere acquiescence in order to establish the requisite course of dealing.

So far as pleading is concerned, in an action upon an account stated, it is not necessary to show the nature of the original transaction or indebtedness or to set forth the items entering into an account: 1 P.L. Encyc., Accounts, §7.

Proper pleading in an action upon an open book account, however, requires that the attached account be more than an unintelligible list of figures, but must be clear and definite charges, not lumped but itemized, showing the nature of the transactions: 1 P.L. Encyc., Accounts, §2. See also Molder v. Xillas, 22 Beaver 74 (1960); Petrie v. Patterson, 24 Beaver 114 (1962); Cove v. Ferguson, 25 Beaver 16 (1963); and Gulf Oil Corp. v. Dooley, 27 Beaver 20 (1965).

Based on the above, the court sustained Defendant’s Preliminary Objections to the lawsuit and the Plaintiff was forced to file a more specific complaint to detail how the facts in that case comport with the law in the Commonwealth of Pennsylvania.

A Contract is Key

A claim for “account stated” or “implied contract” is no substitute for proving a meeting of the minds, which is required to prove any contract in Pennsylvania.   A claim for account stated has a “contract”  at its essence and has the same statute of limitations as any other claim for breach of contract, for example. Richburg v. Palisades Collection LLC, 247 F.R.D. 457 (E.D. Pa. 2008).

In other words, a Plaintiff cannot take a situation where no meeting of the minds has occurred, and call this an “implied” contract” to get damages based on “terms” that Defendant imagined, unilaterally.

 In one case our Pittsburgh Lawyers defended, in Plaintiff’s Count III, Plaintiff made a claim for “contract implied in law,” claiming there was an “offer” when Plaintiff “issued” a loan to Defendant, allegedly.  Allegedly, Defendant “accepted” the “offer” by accepting the loan, but this there remained a mystery as to how or when Defendant agreed to pay a particular interest rate, much less varying “penalty APR” (as charged) or penalty fees.

The trial court judge in Allegheny County sustained our preliminary objections to the lawsuit.  This is because, as indicated by our superior court: “[a] contract implied in fact “arises where the parties agree upon the obligations to be incurred, but their intention, instead of being expressed in words, is inferred from their acts in the light of the surrounding circumstances,” citing Rissi v. Cappella, 918 A.2d 131, 140 (Pa. Super. 2007) (emphasis omitted). “An implied contract may be found to exist where the surrounding circumstances support a demonstrated intent to contract.” Tyco Electronics Corp. v. Davis, 895 A.2d 638, 640 (Pa. Super. 2006) (emphasis added).

Attaching “statements” exchanged between the parties is not necessarily enough to prove a contract for “account stated.”   Rather, the courts will look for proof of an actual meeting of the minds regarding the claim for “account stated” or contract “implied” at law, so these types of claims are no excuse for proving an actual contract, of some sort.

Contact our Pittsburgh contract law attorneys any time to learn more.

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