Debt Health Check – Know who you are Contracting With
It is possible to contract with various different types of legal entities including individuals, partnerships, LLPs (limited liability partnership) and private limited companies. Knowing exactly who you are contracting with is important when it comes to successfully recovering your unpaid debts and essential when issuing court proceedings.
A company is a separate legal entity with a legal personality, rights and duties. It is essential to know the correct name of the company as many company names are very similar. Information regarding any company is now accessible free of charge from Companies House. Therefore you can ensure that you know who you are contracting with from the outset and this will also tell you whether the company is solvent and worth pursuing from a commercial perspective. The web address below takes you directly to the Companies House website:
Trading names of businesses is an area where problems can arise. Any legal entity can use a trading name. Some agreements may be signed in just a trading name such as "ABC" however as the trading name is not the official legal title to any person, partnership or company, court proceedings cannot be issued as they will not be valid. The trading name "ABC" could be a number of different entities such as "Joe Bloggs trading as ABC" or "Bloggs Limited trading as ABC".
Whilst there is no legal requirement for a written contract, if there is an agreement which governs your contract it is important that the correct party is cited on both the agreement and invoices to ensure that you know who you can take action against. Disputes surrounding who you have contracted with and therefore who is ultimately liable for your debts can become lengthy and being clear about this from the outset will help make the debt recovery process much smoother.