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Debts And Debt Collectors


I asked a builder to help me make some stands for my showroom.. we agreed a short  contract by way of e mails and I explained what was required. The cost was about £3,500. In the end , he did the work late and  badly and I had to find someone else to do it properly for me.
Even so, he sent me a bill for £3,500, which of course I didn’t pay. Now I have received a letter from a debt collector who seems to have bought the debt which I apparently owed the builder. They are threatening me with bankruptcy if I don’t pay, what shall I do?

Sometimes debt collectors hope, by sending you a letter suggesting they will apply to the Court to make you bankrupt, you will pay up, even though they may not necessarily know all the facts. [Remember bankruptcy only applies to an individual , the equivalent term for a company is insolvency.] If you can genuinely dispute the debt—for example you can show the work was not done properly and you had to pay to find someone to sort it out–you should write to the debt collector in very clear terms, explaining all this and setting out the relevant  facts. Once they see the debt is disputed , they will almost certainly drop it. They are not going to want to get into a long debate and generally will bring claims against debtors they know aren’t likely challenge them. If in doubt get some advice quickly.

More about Companies and contracts

Last time we mentioned the benefits of forming a limited liability company. But what happens if you start trading before you have incorporated ( set up) your company? The law says that anyone who signs a contract or takes on a liability ( such as a debt) on behalf of a proposed company / one that hasn’t yet been formed, will be personally liable on those contracts or for that debt if the company is never incorporated and /or that liability is not transferred to the new company. Sometimes personal liability can be excluded if this is stated clearly on the relevant documents, but this is the less preferable option

Company names

How can I check whether a company name is available? How can I get basic information about a company which owes me money? Normally you can use the on-line system at www.companieshouse.gov.uk As we’ve mentioned before there is a lot of very helpful guidance on that website. In a future Q +A ,we will be answering questions about why you might not be able to use the name you want.

Thinking of going International?

You may have identified specific overseas markets for your products or your UK growth may have reached a plateau.  There are many considerations when looking to branch out into other jurisdictions – how do parties in these other countries differ in the way they conduct business but also what are the varying legal issues? You will want advice on issues such as international IP protection, pairing with overseas agents and distributors, opening stores or commissioning stockists, optimising your website capabilities, reviewing international contracts and choice of law.  Overlooking these issues can be costly in the long run for your business whereas getting them right will pay dividends.

Your Online Offering

High street sales may be declining but there is growth for etailers as consumers increasingly turn to shopping online.  Online sales of clothing, footwear and accessories rose by 23% in 2011 (year on year).  So how do you get the most from your website?  Of course there are the creative elements such as presenting your products in an attractive way, promoting a strong brand and creating a user-friendly experience.  There are also the procedural and legal aspects, which if done right can enhance the shopping experience and improve rates of sale as well as protect your business.  Your website terms and conditions of use, privacy, data protection and cookies policies as well as payment and refund procedures are all legal necessities but if configured and presented correctly these certainly add value to your business.

As always we confirm these notes are for general guidance only  — when in doubt please seek specific advice.

Nick Gould / Neil Eagleton / Gwyneth Williams

Collyer Bristow LLP solicitors
4 Bedford Row, London WC1R 4DF

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