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How to collect the debt if there is no contract?

How to collect the debt if there is no contract?

Most entrepreneurs mistakenly believe that if the buyer was billed and there is an invoice, it is enough to go to court and demand payment for the goods.

However, this is not entirely true. The invoice itself and the invoice or deed (in the case of services) are not enough. These documents also need to be properly executed and follow a certain procedure before going to court.

We will talk about this later in our article.

  1. Correctly "fix" the conclusion of the contract orally.

The legislation allows concluding contracts in a simplified manner by exchanging letters or documents from which it is clear that there is a certain agreement between the parties (Article 205 of the Civil Code of Ukraine, Article 181 of the Commercial Code of Ukraine).

That is, you must have documents that can confirm that you have agreed with the buyer the delivery of a product, a certain quantity and value. This will be the conclusion of the contract in a simplified manner. And then, as always - to confirm the delivery of goods or services.

!!! Exceptions are cases when the written form of the contract is mandatory (for example, insurance, transportation of goods), and sometimes - and a notarized certificate (purchase and sale of real estate). If such a requirement is not explicitly defined by law, the contract may be concluded orally.

It should be noted at once that e-mail alone will not be enough to confirm the conclusion of the contract. Practice shows that courts increasingly do not take into account the electronic correspondence of the parties if the documents transmitted in this way are not sealed with an electronic digital signature (EDS). Therefore, either send the documents by mail or sign the EDS.

Also, pay attention to the email address where you send the documents. If it has nothing to do with your customer (for example, an email with the name, most likely the debtor will claim that he does not know such e-mail address and the person who corresponded with you, and the court will not take into account your letters.

Next, we will consider what documents will help you confirm the conclusion of the contract in a simplified way.

Let's call the main:

  • order, buyer's application;
  • invoice;
  • expense invoice (act of provided services / performed works);
  • consignment note;
  • payment order / payment receipt.

Buyer's order or application is optional but necessary. Why? Imagine a situation where you ordered goods on 100% prepayment with delivery within 5 days of receipt of funds. However, you did not receive the goods. You apply to the court for a refund, and the seller is surprised to say that no one has approached him about the need to deliver the goods. As your agreement has not been recorded in any way, you will not be able to confirm that the delivery date has been agreed. The result: time spent, lost business, no goods, no money.

This could have been avoided if the order had been made in writing. This way you will be able to fix delivery times, payment or other conditions. In addition, you do not have to make a separate request to the debtor to fix the terms. We will talk about this in more detail below.

Example: The company ordered a door from the contractor and specified a delivery date in the application. The contractor fulfilled the order on time, but was unable to deliver the door on time because the company itself asked to deliver it later. The company then refused to receive the door at all on the agreed delivery day and demanded a refund through the courts. The court refused because the contractor did not violate the terms and conditions of delivery. The delivery was not the fault of the company, not the contractor (Resolution of 24.02.2020 № 921/518/19 Western Commercial Court of Appeal).

 Invoice is your offer to enter into a contract. After paying the bill, the buyer accepts your offer and the contract is considered concluded.

If the invoice was not issued and the buyer simply transferred the funds to you, it will be difficult to link the actual delivery of goods or services with the funds received on your account.

In the absence of a written agreement, the account number should be indicated in the purpose of payment. This will correlate the payment with the delivery of the goods, because the invoice will indicate the same invoice. Also, if the customer has not paid the full cost of the goods, you will have conclusive evidence of the amount of his debt.  

Example: The buyer tried in court to return the money paid to the seller as unreasonably acquired. However, the court found that there was a contractual relationship between the parties. The invoices had all the necessary details, and the payment order contained a link to the account. Thus, the fact of concluding the contract in a simplified manner was proved and the court refused to satisfy the claim (Decision of 28.12.2020 № 922/2344/20 Commercial Court of Kharkiv Region)

Expense invoice (VN) or act of services provided (works performed) perhaps the most important document when concluding a contract in a simplified manner. If you have a properly executed VN (act), you can confirm the receipt of goods or services.

!!! The VN and the act must be signed by an authorized person. Quite often, on behalf of the buyer / customer, the consignment note (act) is clearly not signed by the director (storekeeper, warehouse manager or an undocumented employee in general). In the future, the buyer may even deny the fact of delivery of the goods, because it was received by an "unknown" person. Therefore, be sure to make sure that the VN is signed by a "person with authority". Receive a copy of the power of attorney, order or other document confirming the authority of the recipient.

Example: The seller delivered the goods, which the buyer did not pay. During the trial it turned out that the VN was signed by the buyer by an unknown person, the company's seal was also missing. As a result, it was not possible to recover the value of the delivered goods, the court denied the claim (Decision of 14.09.2020 № 911/1950/20 Commercial Court of Kyiv region).

If you have not been provided with a document confirming the authority of the recipient, insist on affixing the seal of the company. If you have the buyer's seal, you will have a better chance of proving that the goods were actually received by the buyer.

Example: The court found as evidence the consignment note bearing the company's seal. Despite the fact that the unauthorized person signed such a consignment note, the court noted that "the imprint of the seal is evidence of the participation of a legal entity in a business transaction on this consignment note." (Resolution of 16.07.2019 № 922/589/19 Eastern Commercial Court of Appeal).

Consignment note (TTN) will help to further confirm the fact of delivery of the goods to the buyer. If you use a third-party carrier to deliver the goods, the TTN will also be useful if the goods are damaged or lost during transportation, as you will be able to explain the reasons for late delivery or defects of the goods.

Example: The buyer did not pay for the goods received and the seller went to court. However, the documents confirming the delivery contained numerous shortcomings. Thus, in particular, the TTN indicated a different VN than the one for which the goods were delivered. In addition, VN itself had a number of shortcomings. Thus, the seller could not confirm the fact of delivery and collect money for the goods (Resolution of 08.04.2021 № 922/3342/20 Eastern Commercial Court of Appeal). 

Payment order should contain information that will identify the business transaction. That is, if an invoice has been issued, its date and number should be indicated in the payment order. If the payment was made after the delivery or provision of services, in the purpose of payment should indicate the number of VN or act of services provided. If the payment order does not contain a reference to the invoice or bill of lading, it is difficult to prove what exactly you paid for. Therefore, you should transfer funds clearly on the basis of documents that you have available.

You should also pay attention to whether the invoice states its validity period. If you pay the bill after this period, it will be considered that an oral agreement has not been concluded and your payment order will not be accepted by the court as evidence.

Example: The buyer paid for the goods on prepayment, but refused to accept it because the goods did not meet the stated requirements. Subsequently, the buyer tried to collect this payment in court. As it turned out, there was no note of the bank on the date of its receipt and holding on the payment order. In addition, the buyer paid the bill after its expiration date. Therefore, the court refused to refund (Decision of 28.05.2020 № 910/18384/19 Commercial Court of Kyiv).

  1. Send a request to the debtor.

The documents were sorted out. Let's move on. If a written request with all the details of the agreement (term, place of delivery, terms of payment, etc.) has not been made, it is necessary to record from what moment the other party violated the terms of the contract. Therefore, the next step is to make a claim.

If the term of delivery or payment has not been determined, its calculation begins from the moment of presentation of the corresponding requirement (item 530 of the Civil Code of Ukraine). The only exception is payment for the goods under the contract of sale. In this case, the seller is not obliged to demand payment for the goods, as there is a special rule that obliges the buyer to pay for the goods after its acceptance or acceptance of commodity documents on it. In all other cases, send a written request to the debtor is required. After that, within 7 days of receiving your request, the other party must fulfill its obligation. And only after the expiration of this period you can demand termination of the oral contract, return of funds, goods, etc.

!!! It is not necessary to confuse the requirement to deliver the goods with the requirement to return means. If you have not settled the delivery time of the goods, you can first demand delivery of the goods, and only then demand a refund. 

Example: The court refused to collect the funds because the seller was not required to deliver the goods. The buyer immediately sent a request for a refund instead of the requirement to deliver the goods. Thus, the deadline for fulfillment of the obligation did not come and the seller did not actually violate the deadline (Decision of 16.02.2021 № 910/19191/20 Commercial Court of Kyiv).

You should also take care of the delivery / receipt of your request. If, for example, you sent a request to deliver the goods and the seller did not receive the letter, the term of the obligation also did not begin, because the seller is not aware of the existence of such a request.

Example: The buyer did not pay for the goods. As the term of payment for the goods was not agreed, the seller sent a written request to pay and then went to court. Thanks to a copy of this requirement with a description of the attachment and notification of delivery of the letter to the buyer, the seller was able to prove that the buyer really violated the terms of payment (Decision of 18.07.2018 № 922/1549/18 Commercial Court of Kharkiv region).

In this article, we have given just a few examples of how proper paperwork can protect you from future losses. Yes, it is not necessary to enter into a written contract with each client, but care should be taken to ensure that your contractual relationship can be confirmed.


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