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If you decide to pursue a claim, it basically does not matter what type of claim it is. Our clients most often come in with commercial debts, but they may be related to rent or other relationships.

Prevention is essential

Many entrepreneurs do not adequately cover the risks of their business. A good contract is always the basis. However, don’t just think of a contract as a typical “paper” that both parties sign. We enter into contracts every day, for example when we go to the shops or get on the tram. They can therefore take many different forms.

A contract should have clear rules

If you can refer to your GTC (general terms and conditions) in the order, be sure to do so. Conversely, you can also exclude the application of a business partner’s terms and conditions.

If the other party is a consumer, then be cautious. So-called “surprise clauses in the contract” are prohibited by law. This refers to provisions in the terms and conditions that the consumer could not normally expect. These can include provisions on contractual penalties, etc.

What can be recommended as a good precaution in your contract?

• Contractual penalty.
• Interest on late payment.
• Fiction of service – make express provision in your contract for a fiction of service, i.e. set out when and how a document is deemed to have been served (for example, on the third day after it is sent to an email address).
• Choice of court – by choosing a court in your place of business or home, you can save on travel costs and delays.
• Extending the statute of limitations.
• Contact details – ideally obtain as much information as possible, or enshrine the obligation of the other party to update it.

Other precautionary safeguards are to strengthen and secure the contract:

• They can serve as an incentive to pay the debt (interest on late payment, penalty),
• or to ensure payment if the debtor does not have the money (e.g. a guarantee or lien).

Other tools that will help in prevention:

• Insolvency register – we check the economic situation of the counterparty. We will check whether insolvency proceedings have already been initiated. If this is the case, it is advisable not to enter into a contract with such an entity.
• Central Register of Executions – maintained by the Chamber of Executors. It contains information on executions conducted by bailiffs. The information is subject to a fee.
• SOLUS register – although only the person who is the subject of the extract can submit an application to it, however, e.g. in the case of long-term cooperation, the partner can be asked to supply an extract from this register himself.
• Real Estate Register – although it is not possible to search by name, the opposite can be done. If we know that a certain person owns a property, we can look at the property in the Land Registry and check whether it is not affected by a mortgage or bailiff’s seal.
• Companies register – this is useful if the counterparty is a partnership, company etc., we can look up other information such as accounts in the register.

How is the recovery itself carried out?

Internal recovery – it is not necessary to immediately go to a law firm with each claim. Especially if similar types of claims keep recurring. However, it is possible to set up a standard internal process together with the lawyer and then use the prepared templates. Such a tool could be, for example, a reminder. It is advisable at this stage to already draw attention to the penalty, interest or costs associated with the recovery of the debt (depending on what you have stipulated in the contract).

An amicable solution should also be included. You can appeal for voluntary performance, but at the same time warn against going to court and referring it to a law firm.

We recommend sending a reminder directly to the counterparty’s inbox.

File management – electronic or physical. Here we collect anything related to the recovery of the debt in question. The basis can be a contract, order, etc., but anything can serve as evidence – chat messages, emails, witness testimony, etc. This includes information about securing the debt, partial repayment of the debt, etc.

Assignment (i.e. sale) of the debt – at some stage we may decide that it is not worth pursuing the debt (for example, it appears uncollectible to us). This can be done without the debtor’s consent. There are companies on the market that will buy the debt, but for a fraction of its value. Sometimes even a time-barred claim can be enforced in this way. It is always worth consulting a lawyer about this procedure.

Solicitor’s recovery – the solicitor will to some extent repeat the sending of the reminder. At this point, however, it is possible to proceed with representation by a solicitor and send a reminder by way of a pre-action notice. This can be used to put even more pressure on the debtor.

Depending on the agreement with the client, an amicable solution can again be offered (remission of interest, repayment schedule, remission of costs or contractual penalties, etc.). Here again, it is worth pointing out the increasing costs – here associated with the service of a law firm. This is usually motivating for the opposing party.

An additional period of time should be given for performance and the next course of action – i.e. court proceedings – should be pointed out (but never by way of threats or blackmail).
Without a pre-action notice, there is a risk that the court will not award costs, for example.

Court proceedings – may take the form of an adjudication procedure resulting in a judgment determining whether a claim exists and for what amount. This part can be quite lengthy and challenging. However, it can essentially be skipped if a settlement in the form of a notarial deed is concluded beforehand, where the counterparty formally acknowledges its debt.

Enforcement proceedings – a follow-up procedure where a bailiff is appointed to finally recover the debt.