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Suit on Sworn Account: The Basics

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Written by Anne McBroom Balke
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Oftentimes, business clients come to us needing help to collect on unpaid invoices. Contrary to common belief, businesses can pursue unpaid invoices even if there is no signed contract between the parties. Although there are many ways to initiate collection efforts, including sending a demand for payment, significant debts often ultimately require a lawsuit. One claim we frequently pursue in collection litigation is called a “suit on sworn account” (“SOSA”).  

Although typically brought in conjunction with other claims such as breach of contract, SOSA claims are used as a procedural tool to overcome the lack of a formal, signed contract, such as when the debt is evidenced only by documents like purchase orders or invoices, however informal. And, as discussed below, a SOSA claim forces the debtor to swear under penalty of perjury to any denial of the claim asserted, an awkward position for honest debtors.

SOSA claims are appropriate when the claim is founded upon an open account or other claim for goods or services. Any company in the business of providing goods or services for a fee is eligible for this type of claim. So long as a “systemic record has been kept,” the account has been adjusted for “all lawful credits and offsets,” and the primary damages the company seeks are the unpaid debts, a SOSA claim is likely viable.

The perks? As mentioned above, once the plaintiff creditor has filed its petition, the burden is on the defendant debtor to respond with a specific sworn denial as to why the debtor doesn’t owe the funds claimed. This is a heightened burden compared to most other claims and a general denial of the claim by the debtor will not suffice. If the debtor fails to file a sworn denial stating why the debt claimed by the creditor is not legitimately owed—a technical requirement—the court is allowed to grant judgment to the creditor even if the debtor generally denies or questions the validity of the debt.

So, despite the fact that there might not be a contract between the parties, SOSA claims can be successfully asserted to obtain judgment for creditors, and can sometimes provide a technical win when the debtor is unwilling to swear to the denial of the claim, or possibly just forgets.

If your company needs to collect on unpaid invoices or any other similar claims, Stibbs & Co. is happy to help.


These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed.


 

Topic: Commercial Litigation

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