What is a claim for an account?
A claim for an account is, as it’s name suggests, a claim for the other party to provide the accounts documentation for a particular financial relationship or arrangement, when they have refused to provide it voluntarily.
In what situations do such claims arise?
Claims for an account commonly arise in the case of partnership agreements and joint ventures, agency agreements where commission is due or other profits are shared, and out of contracts where commission is due or profits are shared.
Claims for an account are almost always upon the basis that either:
- The party with the accounting information refuses to provide it to the party who requires it; or
- The party with the accounting information has provided some information which the party requiring it suspects is incomplete or inaccurate.
Why would you bring a claim for an account?
In most cases a claim for an account is brought as a precursor to a claim against another party for an amount of money. The claim for an account is brought simply because the party bringing the claim does not have the information to formulate whether there is a financial claim against that party, and if so, how much it is for.
Example: Imagine that A agreed with B that B would sell goods for A in exchange for a commission payable by A to B for their work calculated by reference to profits. A would be totally reliant on B to provide the information needed to clarify how much profit was made, and was due back to A. A would also have no information with regard to the corresponding commission due to B and would rely on B’s disclosure as to the profits made. A would first need to request from B whatever documents A considered were necessary.
If B refused to provide these A could proceed to claim against B for an account. If B refused to provide the information or A suspected the information provided was incomplete or inaccurate then A could only sue B if he knew he had suffered some loss at the hands of B. A would first need the account before his loss (if any) could be calculated. A would therefore need to sue for an account in the first instance.
Common areas in which claims for an account occur
Partnership Disputes/Disputes Arising From Joint Ventures: where one partner seeks underlying documentation to demonstrate the financial position of the partnership at a given point in time.
Agency Disputes: usually where there is a claim for commission and one party requires the account.
Other contractual disputes: such as in an employment situation where an employee has some agreement to be paid by reference to the profits of the business.