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Get your bad payers to pay your costs of recovery!
25 February 2010
The age old problem. A customer or client does not pay and the debt is of fairly low value. Do you have the hassle of trying to recover it yourself, or instruct lawyers but with the prospect of not recovering their fees? Such problem can be extinguished with some forward thinking.
Your terms and conditions are the foundation of the agreement between you and the customer/client. There is absolutely no reason why they cannot provide that in a situation where the customer does not pay and you have to seek recovery against them, they will pay your legal fees of doing so (regardless of the size of the debt).
This kind of contractual term is supported by a recent Court decision. In Shaw v Nine Regions (heard in late 2009) a lender had to sue on a loan agreement. The agreement provided that if enforcement was necessary the borrower would pay the lender's costs. It was therefore a contractual term. The lender sued and because of the low value of the outstanding sum, the Court allocated the case to the Small Claims track in which, normally very limited costs are recoverable. The Judge found for the lender but made no order as to costs because the case was a small claim. The lender appealed. On appeal it was found that the Judge should have awarded costs in accordance with the contractual term and the mere fact that the case was a small claim did not affect this.
Therefore, as we always advise, get your contractual terms right and they can work wonders and afford you good protection.
Howell-Jones are a leading firm of solicitors in Surrey and have a number of lawyers who are proficient in drafting. Let them take the hassle out of it for them. They can draft your standard t&c's to take away a lot of your headaches!
