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Account Stated vs Contract Defenses in Credit Card Lawsuits In the old days, a credit card agreement was signed by the consumer and sent into the bank for approval. However, these days many credit cards are issued online, and there is no live signature. This lack of both a written signed contract comes into play during lawsuits on defaulted credit card debt. If you've been sued for a credit card debt, there are two different ways the Plaintiff can say you, the Defendant, entered into a contractual agreement with the original creditor. This is crucial, because if they say you became indebted via a contract, they will have to provide one in court in order to win. Your Method of Attacking a Complaint/Summons is Different based on whether or not the Plaintiff is claiming "Account Stated" or "Entered into a Contract". Why Account Stated Basis of Suit is Used by A CreditorMost credit card companies cannot produce a contract with your signature, digital or other wise as part of their case against you. This can get the case tossed out immediately. The easiest thing for a Plaintiff to do when suing you to declare that the contract is account stated. If they use account stated as the contractual agreement, no written contract is required as evidence. This makes it much easier to win their case. The other big advantage to establishing an account as account stated is that the cause of action is the account stated aspect of the contract itself. If the Plaintiff is basing their claim on a contract, many times you can get the case thrown out because no cause of action was stated. If their case is based on account stated, the cause of action is built in. What's the Difference between a Written Contract and an Account Stated Contract?To answer this question, we have to give you a mini legal lesson. (Don't worry, it's not too in-depth). Classic contract law in general gives the definition of a purchase contract as: one party buys at an agreed-upon price and pays per the terms of the contract. From there, should a default occur, it's all a matter of how well the terms of the contract can be proved:
(It should be noted, that once proved, all of the above contracts are equally legally binding. It's the difficulty of proof which distinguishes them.) How do You Know if the Plaintiff Maintains the Contract is Account Stated?You ascertain what type of contract the Plaintiff is alleging by reading the allegations in the complaint. Remember, an allegation is every separate action the Plaintiff claims you did to harm them. The allegations are usually presented in a numbered list. The type of contract the Plaintiff is claiming is usually in the top 3 allegations. Based on the above information, let's see if you can tell which kind of contract is indicated in each of these allegations.
Quiz - Account Stated or Affirmitive Defense?(Answers given below)
Answers
How to Approach an "Account Stated" LawsuitHere is the full Account Stated Doctrine. Stated simply, an account stated is generally established when a debtor fails to object to a bill from his creditor within a reasonable time. Questions to Ask Yourself when Considering Defenses You Can Use to Attack the Validity Account Stated Cases:
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