Debt Collection: Claims, Policies, Practice and Procedure

I. Breach of Contract Claims

To prove a breach of contract claim you have to have a valid and enforceable contract, generally speaking. For a more involved conversation on a breach of contract click here.

Your contract should have a sufficient discussion on : (1) scope of work and (2) price/compensation

The parties should have clearly consented to the terms of the contract which is usually best evidenced by them signing the contract, and initialing each page.

Key Contract Provisions:

In addition, a well drafted contract should include some of the following provisions to help you collect your debt and minimize your liability:

  • legal fees provision: to ensure you get legal fees if you are successful in a litigation or arbitration.
  • arbitration provision: to ensure that claims can be handled more efficiently than in Court.
  • joint and several liability clause: if there are multiple clients or customers you can enforce your rights as against one or both of them.
  • choice of venue clause: to determine where a litigation or arbitration will physically take place.
  • choice of law clause: to ensure that the law governing any disputes is based on the state where your Company is physically located.
  • limitation of liability clause: to ensure that if there are any counterclaims your liability is specifically limited accordingly.

Supporting Documents You May Need to Prove Your Claim:

  • signed contract
  • proof of payments
  • invoices
  • correspondence demanding payment
  • documents or correspondence indicated you performed the work
  • documents or correspondence indicating that the counter-party received the work or services you performed
  • correspondence where your counter-party accepted the work or services you performed.

II. Unjust Enrichment Claim

Without a signed contract your claim becomes more difficult to collect but certainly not impossible. You have what is called an unjust enrichment claim.

An unjust enrichment claim is an equitable claim.

An Unjust Enrichment claim says that even if there wasn’t a formal agreement (say because the price was not agreed to, or some other material term might have been missing that makes a Breach of Contract claim unsuccessful) you should still get paid for the reasonable value of your services because:

(1) the defendant requested services from you, (2) you relied upon that request, (3) the defendant knew you were performing services and (4) the defendant has retained the benefit of those services without paying you, and (5) as such as been unjustly enriched at your expense.

Unlike in a Breach of Contract claim, with Unjust Enrichment you have to show the reasonable value of the services performed. This means showing that your price and time spent were both reasonable under the circumstances. This is a more difficult task than a breach of contract claim but not impossible.

You will have to prove:

  • the services you performed,
  • the time spent,
  • value of that time, and
  • expenses incurred on behalf of your client or customer.

Supporting Documents You May Need to Prove Your Claim:

  • correspondence proving that the customer/client requested services
  • correspondence from you indicating the services, results, or goals you agreed to perform/achieve.
  • correspondence indicating you expected to get paid for performing services etc.
  • Time cards, invoices, statements indicating the services performed and time spent providing those services.
  • Any document indicating why those services were necessary or beneficial for the client/customer
  • Any document indicating that the customer/client received those services — and benefitted from those services.

III. Account Stated Claim

A powerful tool in debt collection is sending a monthly statement of account.

Your Statement of Account should identify the customer’s correct and complete legal name and the customer’s correct address.

The statement must reflect the balance that you are seeking to collect.

You should send the Statement of Account by mail and through whatever other channels is customary for corresponding with that particular customer/client.

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