Q: What is the definition of an open account?
Open Account -- Credit extended that is not supported by a note, mortgage, or other formal written evidence of indebtedness.
Open account -- Same as running account, although the term open account is usually employed. In trade (particularly the wholesale trade) when an open account is established the buyer arranges with the seller to receive credit for a certain period on purchases made. He does not give a promissory note or furnish security of any kind, but when the period of credit agreed upon has elapsed after a (after each) purchase he makes payment for it by check or bill of exchange or in whatever way may have been predetermined by the seller and buyer. If the period of credit is exceeded without payment by the buyer the seller is considered to have or perhaps by stipulation has the right to draw on the buyer for the amount due. The name open account also is applied to an account in which some item is not settled between the parties.
If you are trying to see how this term applies to statutes of limitation for credit cards, many courts will view the credit card account as an "open account," as it is a series of purchases, credit, charges and the like where credit has been extended for a promise to pay. In other words, if there is no signed application available, but a series of statments, courts will veiew the account asn an "open account, " even though it doesn't fir the classic definition.
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