The following Commercial guidance note provides comprehensive and up to date legal information covering:
This Practice Note reviews the options available to a business to recover an unpaid trade debt. These options include writing-off the debt, negotiating a settlement, insolvency proceedings (such as a statutory demand or winding-up petition) and court proceedings.
A business always has the option to write-off the sum which is owed to it. It may choose to do so in situations where, for example, the cost of recovering the debt outweighs the amount which is owed, or where the overall commercial relationship between the business and the debtor company is more valuable to it than the recovery of the particular debt, or where a financial check reveals that the debtor company is simply unable to pay its debts and is not good for the money.
If the debt that is the subject of the dispute concerns a written contract, you need to check whether or not that contract contains an arbitration and/or a mediation or other dispute resolution clause. Many commercial contracts provide for escalated, or tiered, dispute resolution processes as a means of resolving disputes directly between the parties themselves without (or at least, before) seeking recourse to the courts or other formal alternative dispute resolution forum.
Issues to consider include:
whether the clause covers the debt in question
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