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Debt collection: how to obtain the amounts due?

Home > French Business Law | Published 2018-04-13

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Commercial contracts are at times subject to unexpected risks, such as payment failure from one party in a sale or a service delivery. If we do not have the right option, it may be really complicated to collect the amounts owed.

The amicable collection

Commercial relations may generate disputes, as for example a sudden termination of business relations that used to go on for many years, a defective performance of a service or a payment failure in the framework of a sale or a service delivery.

In case of a dispute with the other party due to an overdue, the first reaction would be to attempt an amicable debt recovery. Claiming the payment of amounts due by a negotiation often leads to a constructive communication that allows to identify the reasons of the dispute, such as the financial difficulties of your business partner. In such cases, granting payment terms might merely resolve the dispute.

When it is necessary, the lawyer may send a formal notice to the other party, with compulsory elements and persuasive arguments.

Legal remedies for default of payment

A settlement is often the best option but depending on the other party, the outcome might not be satisfactory. The course of action would be determined according to the complexity of the case.

When a debt is unquestionable, it is possible to request summary proceedings, only if the urgent nature of the situation can be provided. Such action before French courts can thus allow conservatory measures, such as a contingency reserve for all or part of the debt.

It is also possible to request an order of payment, which will allow a writ of execution that gives the right to the creditor to obtain payment, for example by confiscation of property.

Rather, when the debt itself or its amount is challenged, it would be necessary to sue the other party before the competent court to obtain payment of the debt and complementary damages. Thus, your lawyer can demonstrate that the debt is unquestionable, liquid and due; and that the amount can be assessed.

How to hedge against trade disputes?

Many disputes can be avoided, or at least, settled when the contractual relationship has been cleverly organized. A well drafted contract, that includes appropriate provisions to anticipate the settlement of disputes, can therefore avoid time-consuming and costly law suits.

Furthermore, it must not be forgotten to acquire guarantees, such as bank guarantees or a “title retention clause”, in order to be protected from insolvency risks and not compromise your activity.

Secure your business is crucial. With the sound advice of an expert in debt recovery, you can ensure that the relevant actions would be introduced and that your situation would be peacefully settled. Picovschi Lawyers remain at your entire disposal if needed.

This article is available online for public information purposes. It is updated regularly, as needed. Due to the constant evolution of the laws and the legal system, we cannot guarantee that the information in this article is still applicable. We invite you to contact us with any legal questions or concerns you have regarding this topic at +33 1 56 79 11 00. In no way can this firm be held liable for articles that contain inaccuracies or are now out of date.

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