FORT LAUDERDALE BUSINESS LITIGATION: AN ALTERNATIVE TO A BREACH OF CONTRACT CLAIM

It is common for businesses to enter into vendor-customer relationships with other business. One business might regularly purchase a product or service with another business. In exchange, the vendor will periodically invoice the customer for the product or service. If the customer stops paying the invoices, or otherwise accumulates a large debt in arrears, Florida law provides the vendor with certain ability for recourse. While the vendor might traditionally sue for breach of contract, the other causes of action like account stated and open account could also be available. The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

“Actions for an account stated and an open account are two distinct causes of action requiring different burdens of proof.” South Motor Co. of Dade County v. Accountable Const. Co., 707 So. 2d 909 (Fla. 3d DCA 1998). An account stated is “an agreement between persons who have had previous transactions, fixing the amount due in respect to such transactions and promising payment.” To establish a cause of action for account stated, a plaintiff must prove there was an agreement that a certain balance is correct and due, and an express or implicit promise to pay that balance. Carpenter Contractors of America, Inc. v. Fastener Corp. of America, Inc., 611 So. 2d 564 (Fla. 4th DCA 1992).

An implicit promise could occur when a party fails to object to an invoice within a reasonable time. Robert C. Malt & Co. v. Kelly Tractor Co., 518 So. 2d 991 (Fla. 4th DCA 1988). “When a debtor has been issued an account statement and the debtor fails to object in a reasonable time, it is presumed that the account is correct and the debtor is liable.” Burt v. Hudson & Keyse, LLC, 138 So. 3d 1193 (Fla. 5th DCA 2014). “However, the failure to object only becomes an implied agreement when the plaintiff establishes that it had a practice of periodic billing in the regular course of dealing with the defendant.” Florida case law provides little guidance on what constitutes a reasonable time. Therefore, reasonable time likely depends on the factors of the particular case.

Defenses to a claim of account stated include “fraud, duress, mistake or other grounds cognizable in equity for the avoidance of the instrument.” Merrill-Stevens Dry Dock Co. v. Corniche Esp., 400 So. 2d 1286 (Fla. 3d DCA 1981). For example, a defendant might assert the affirmative defense of fraud if certain services or products identified on the account statement were never provided.

A cause of action for open account accrues when the plaintiff has an “an unsettled debt arising from items of work and labor, goods sold, good sold and delivered with the expectation of further transactions subject to further settlement.” Central Ins. Underwriters, Inc. v. Nat’l Ins. Finance Co., 599 So. 2d 1371 (Fla. 3d DCA 1992). The plaintiff must have an itemized copy of the transaction associated with the account as a prerequisite to assert a claim for open account. Farley v. Chase Bank, USA, N.A., 37 So. 3d 936 (Fla. 4th DCA 2010).

Account stated and open account are often brought in conjunction with a breach of contract claim. However, account stated and open account are useful in certain circumstances because they might offer a path to success if there are problems enforcing the contract. Account stated and open account might even provide a plaintiff a better chance of success when compared to a traditional breach of contract claim because it is generally more straightforward to prove the existence of an unpaid account balance rather than compliance with several different contract provisions.

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.