A payment order is a legal instrument used to expedite court proceedings for monetary claims. Its main purpose is to enable the creditor to obtain a court decision without having to go through a lengthy and costly court hearing. In other words, the court will order you to pay the amount of money that the claimant is demanding. What are the types of such orders and how do they differ?
A payment order is issued by the court on the basis of a petition filed if the debtor fails to repay his debt duly and on time. Depending on the nature of the claim, the law and the place of origin, there are several types of payment orders, including European, bill of exchange and cheque payment orders. Each of these types has its own specific characteristics, procedural procedures and legal frameworks.
Simply put, it is a tool for the court to recover debts in a simplified court procedure. When a payment order is used, the whole process is often more advantageous for both the creditor and the courts. The time taken to reach a decision is significantly shorter and the overall cost of the court proceedings is reduced. Creditors can use them for promissory notes, cheques and ordinary money claims.
The classic case in which a payment order is used is when a creditor files a petition with the court and proves that he is entitled to a specified amount of money. The court then issues a payment order. It becomes binding if the debtor does not object within a specified period of time. As soon as the debtor does not object, the decision becomes final and the creditor can proceed to recover the debt. For example, by means of enforcement proceedings. However, if the debtor resists the order for payment, the whole matter will go to a classic court proceeding. There, a decision is made on the basis of the evidence and the testimony of both parties involved.
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The European order for payment is a special instrument designed to recover cross-border monetary claims within the European Union. This type of order was introduced by Regulation (EC) No 1896/2006 of the European Parliament and of the Council. This Regulation lays down a uniform procedure for issuing European orders for payment.
The main advantage of the European order for payment is that it can be used in all EU member states. This enables creditors to effectively recover their claims outside the borders of the Czech Republic.
How to apply for this order: Simply contact a legal advice centre and speak to an available solicitor who will arrange everything for you. Alternatively, you can submit the application for extradition using the standardised form available online on the European Commission’s website.
Once the court has examined the application and decided that it meets all the requirements, it will issue a payment order. It then goes to the debtor, who has 30 days to lodge a statement of opposition. If the debtor does not lodge a statement of opposition, the order becomes enforceable and the creditor can start collecting the debt.
This special type of payment order is designed to recover debts based on promissory notes. A bill of exchange is a security that provides written evidence and guarantees that the debtor will pay the creditor a specified amount on a specified date. Promissory notes are usually used in commercial transactions as a guarantee of payment. A bill of exchange makes it easier to enforce them. In the Czech Republic, the law on bills of exchange is regulated by the Bills of Exchange and Cheques Act. It lays down the rules for issuing bills of exchange, their particulars and the procedures for their enforcement, including the bill of exchange payment order.
A creditor who holds a valid bill of exchange may file a petition for a bill of exchange payment order. On the basis of the bill of exchange presented, the court will normally issue a payment orderstraight away. No further evidence is required, as the bill of exchange is sufficient proof of the existence of the debt. The process is very quick and efficient. This is not the only reason why it is very popular with commercial companies and financial institutions when someone owes them money by means of a promissory note.
The options for defending against a promissory note are quite limited. The debtor can only object in specific cases, for example if the bill of exchange does not contain all the statutory elements or if the debt has already been paid. In other cases, the debtor has no choice but to pay the amount after receiving the bill of exchange order.
Tip: A bill of exchange is a security. If you have just inherited a promissory note or other type of security, read about how securities inheritance works and what you may encounter.
A cheque payment order is similar to a bill of exchange, but you can use it to recover debts arising from cheques. A cheque is a security that serves as an order for a bank to pay a certain amount of money to a third party. If a cheque is not cashed, for example due to insufficient funds in the account, the creditor can apply to the court for a cheque payment order. This type of order is again regulated in the Czech Republic by the Bills of Exchange and Cheques Act, which specifies the particulars of cheques and the procedures for their enforcement.
A creditor who is in possession of an uncashed cheque may apply for a cheque payment order. The court again proceeds in a simplified manner, where the cheque itself serves as evidence and no further proof is required. This procedure is very quick and efficient, similar to the bill of exchange order.
Even against a cheque payment order there are limited possibilities of defence. The cheque proves that the debtor really should have paid the amount in question. It can only be defended if the cheque does not meet the legal requirements or if the creditor has issued it fraudulently. If the cheque and its validity cannot be challenged, the cheque payment order becomes enforceable again and the debtor is obliged to pay the amount on the cheque or order.
Each type of order for payment has its own specific use, legal framework and procedural procedures. The European order for payment is mainly intended for cross-border claims within the European Union, while the bill of exchange and cheque order for payment are used in commercial transactions based on bills of exchange and cheques.
| Type of payment order | Applicability | Legal framework | Debtor's defence |
|---|---|---|---|
| European order for payment | Cross-border claims within the EU | Regulation (EC) No 1896/2006 of the European Parliament and of the Council | Filing a statement of opposition within 30 days |
| Promissory note | Recovery of claims under promissory notes | Bills of Exchange and Cheques Act (Act No 191/1950 Coll.) | Objections to the particulars of a bill of exchange |
| Cheque payment order | Recovery of cheques | Objections to the particulars of a cheque |
As you can see, payment orders are an effective tool to quickly and efficiently collect your money owed to you. Simply file a petition and the court will then issue a payment order to the debtor. Thanks to the European order for payment, you can also recover your debts across countries in the European Union. The debtor can oppose it within 30 days, whereas with a bill of exchange order and a cheque payment order, he can only defend himself if he proves that the cheque or bill of exchange does not comply with legal obligations or was issued fraudulently.
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