The document summarizes the process for recovering commercial debts in the UK, including pre-litigation steps like sending a letter before action, and litigation steps such as issuing a claim form and particulars of claim. It discusses the Late Payment of Commercial Debts (Interest) Act 1998, which implies terms into contracts for statutory interest and compensation on late payments. It also provides guidance on properly pleading claims for interest and statutory compensation to ensure they can be recovered.

1. Recovery of Commercial DebtsSale and Supply of Goods and Services Luke Tucker Harrison Solicitor

2. The collections process Pre-contract Supply of goods or services Invoicing Credit control Legal

5. Late Payment of Commercial Debts (Interest) Act 1998 Qualifying Debt Is a qualifying debt the whole debt or an invoice. Section 3(1) states:- “(1) A debt created by virtue of an obligation under a contract to which this Act applies to pay the whole or any part of the contract price is a “qualifying debt” for the purposes of this Act, unless (when created) the whole of the debt is prevented from carrying statutory interest by this section.” Contracts that exclude statutory interest (including purchase Orders) maybe unenforceable unless there is a substantial contractual remedy (Section 8(1)) The Act does not apply where there is a contractual remedy within the contract to pay interest for late payment. (Section 8(2))

6. Legal proceedings (non insolvency) Pre-Action Protocols and Practice Direction Letter of Claim/Letter before Action (“LBA”) Claim Form and Particulars of Claim (CPR 16) Allocation or Summary Judgment Directions Final Hearing

7. Pre-Action Protocols and Practice Direction Practice Direction to Pre-Action Protocols “1.4 The objectives of pre-action protocols are: (1) to encourage the exchange of early and full information about the prospective legal claim, (2) to enable parties to avoid litigation by agreeing a settlement of the claim before the commencement of proceedings, (3) to support the efficient management of proceedings where litigation cannot be avoided.” If there is no Protocol apply overriding objective principles. “4.1 In cases not covered by any approved protocol, the court will expect the parties, in accordance with the overriding objective and the matters referred to in CPR 1.1(2)(a) [equal footing], (b) [saving expenses] and (c) [proportionality], to act reasonably in exchanging information and documents relevant to the claim and generally in trying to avoid the necessity for the start of proceedings.”

8. Letter of Claim/Letter before Action (“LBA”) State name of client State amount owing plus any interest and compensation (including explaining how interest has been calculated) State why invoices have been raised by reference to contractual provisions Enclose copy invoices, contract and supporting documents

9. Claim Form and Particulars of Claim Claims need to be pleaded in accordance with CPR Part 16 “16.2 The claim form must – (a) contain a concise statement of the nature of the claim; (b) specify the remedy which the claimant seeks; (c) where the claimant is making a claim for money, contain a statement of value in accordance with rule 16.3; (cc) where the claimant's only claim is for a specified sum, contain a statement of the interest accrued on that sum; and (d) contain such other matters as may be set out in a practice direction.”

10. Claim Form and Particulars of Claim The Particulars of Claim must comply with CPR Part 16.4 “16.4 (1) Particulars of claim must include – (a) a concise statement of the facts on which the claimant relies; (b) if the claimant is seeking interest, a statement to that effect and the details set out in paragraph (2); (c) if the claimant is seeking aggravated damagesor exemplary damages, a statement to that effect and his grounds for claiming them; (d) if the claimant is seeking provisional damages, a statement to that effect and his grounds for claiming them; and (e) such other matters as may be set out in a practice direction.” It is not sufficient to simply plead invoice numbers – the Defendant (and the Court need to know why invoices are due for payment).

11. Pleading Interest Interest and statutory compensation will not generally be recoverable unless properly pleaded. “(2) If the claimant is seeking interest he must – (a) state whether he is doing so – (i) under the terms of a contract; (ii) under an enactment and if so which; or (iii) on some other basis and if so what that basis is; and (b) if the claim is for a specified amount of money, state – (i) the percentage rate at which interest is claimed; (ii) the date from which it is claimed; (iii) the date to which it is calculated, which must not be later than the date on which the claim form is issued; (iv) the total amount of interest claimed to the date of calculation; and (v) the daily rate at which interest accrues after that date.”

12. Reviewing a Defence Does the Defence comply with CPR Part 16.5? “16.5 (1) In his defence, the defendant must state – (a) which of the allegations in the particulars of claim he denies; (b) which allegations he is unable to admit or deny, but which he requires the claimant to prove; and (c) which allegations he admits. (2) Where the defendant denies an allegation – (a) he must state his reasons for doing so; and (b) if he intends to put forward a different version of events from that given by the claimant, he must state his own version. (3) A defendant who – (a) fails to deal with an allegation; but (b) has set out in his defence the nature of his case in relation to the issue to which that allegation is relevant, shall be taken to require that allegation to be proved.

13. Legal proceedings (insolvency) LBA Statutory Demand (if individual(s)) Statutory Demand? (if company) Application to set aside Statutory Demand Injunction to restrain presentation of Petition Bankruptcy Petition Winding up Petition

14. Enforcement Enquiry Agent -v- No Trace No Fee Order for debtor/debtor’s officers to attend Court for questioning Bailiff or High Court Enforcement Officer Third Party Debt Order Charging Order Insolvency