Business Debt – Prevention is better than cure, as De Cotta Law explains…

Filed under : Business & Legal Partners, Civil Law, Commercial Law, Employment & Labour Law - Spain, Insolvency, Litigation

Owning, running and managing a business in Spain during the crisis is a challenge. Unpaid invoices and accounts can cause immediate cash flow problems and build up longer term issues for both small and large companies.
One of the best ways of preventing this from happening is having correctly drafted payment terms, together with proper contractual agreements with your clients and customers. Some agreements don’t correctly define the company or provider and they are therefore difficult to enforce if you have a problem with an account.
For both parties the certainty of knowing payment terms and having copies of invoices and facturas is far better than having to go to court to make a claim. A Spanish lawyer can study the documentation you give to clients to ensure any agreement or contract can be enforced. This applies to everybody from estate agents to hotel owners and a good set of customer or client documents makes it less likely that problems will occur.
Spanish courts do have an accelerated procedure for monetary claims and something similar to a UK summary judgement can be obtained that can be enforced against the debtor if they do not contest it. Normally the first step is for a ‘burofax’ to be sent to the debtor demanding payment within a fixed number of days. If there is no response then a claim can be made and there are now court costs to consider as well as legal fees. However if you are successful some of the costs can be recovered from the other party.
For claims above 3.000€ it is normally necessary to commence a civil claim rather than just a ‘small claim’. This does involve extra costs and we normally recommend undertaking a property or asset search to see if you are likely to be able to recover the debt. Each case should be decided on its merits so it is wise to get legal advice both prior to entering into contracts, and again if you need to make a claim for an unpaid debt.
For information or to discuss your business or private client legal questions during a private consultation please contact Sandra Wrightson:
De Cotta Law (De Cotta McKenna y Santafé)
Centro Comercial Valdepinos 1 y 3ª
Urb. Calypso
29649 Mijas Costa (Málaga)
Tel.: +34 952 931 781
Fax: +34 952 933 547
E-mail: [email protected]
www.decottalaw.com