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Validity of Contract and Statue of Limitations

By: Derek Hawkins//August 15, 2017//

Validity of Contract and Statue of Limitations

By: Derek Hawkins//August 15, 2017//

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7th Circuit Court of Appeals

Case Name: Pine Top Receivables of Illinois, LLC v. Banco De Seguros Del Estado

Case No.: 16-3499

Officials: EASTERBROOK, MANION, and HAMILTON, Circuit Judges.

Focus: Validity of Contract and Statue of Limitations

Pine Top tells us that this statute allows the liquidator to ignore the treaties, wait until the end of the liquidation, and then submit one bill netting multi-decade balances across multiple treaties. The district judge was not persuaded, and neither are we. The statute does not provide that a liquidator may wait until the very end to net the firm’s debits and credits. All it tells us is that balances must be netted and only the net paid.

Pine Top offers a second contention: that the 2008 bill was an “account stated.” In Illinois, as in most other jurisdictions, the parties to a contract may resolve differences about who owes how much to whom and pick a definitive number. This kind of agreement establishes a new contract and starts its own period of limitations. Judges call agreement on a bottom line an “account stated.” According to Pine Top, when Banco did not respond promptly to the 2008 statement, that was as good as an agreement and permitted a suit any time within the next ten years.

Banco protests that it did not receive the statement until 2010 and blames problems in international mail. No matter. Failure to respond to a proposal differs from acceptance. It takes an offer and acceptance to form a contract—and the judiciary in Illinois tells us that an account stated is a kind of contract. See, e.g., Toth v. Mansell, 207 Ill. App. 3d 665, 671– 72 (1990); Allied Wire Products, Inc. v. Marketing Techniques, Inc., 99 Ill. App. 3d 29, 39–40 (1981). The liquidator made a proposal, Banco did not accept, a contract was not formed, and the “account stated” claim fails. The district court was right to dismiss this suit as untimely.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.

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