”Open Book Account” Legal Definition in California

In Gross v. Recabaren (1988) 206 Cal. App. 3d 771, the court defined an open-book account within the meaning of Code of Civil Procedure section 1295.

Section 337a defines a "book account" as follows: " a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation, and shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made, is entered in the regular course of business as conducted by such creditor or fiduciary, and is kept in a reasonable permanent form and manner and is (1) in a bound book, or (2) on a sheet or sheets fastened in a book or to backing but detachable therefrom, or (3) on a card or cards of a permanent character, or is kept in any other reasonably permanent form or manner."

"While an 'open' book account has been defined as ' "an account with one or more items unsettled," ' it also includes ' "an account with dealings still continuing." ' By contrast, a 'closed' account is, according to Black's Law Dictionary, one 'to which no further additions can be made on either side ... .' Thus, it is clear that the 'open' or 'closed' nature of a book account turns not on the account balance per se, but on the parties' expectations of possible future transactions between them." ( 206 Cal. App. 3d at p. 778; see Cochran v. Rubens (1996) 42 Cal.App.4th 481 at p. 485.)

The court in Cochran v. Rubens further explained that whether the parties expect possible future transactions between them in the physician-patient context "naturally depends on whether there is a continuing physician-patient relationship." ( 42 Cal.App.4th at p. 485.)