Let's Get Started

Tell us about your debt in just a few minutes.

Blog post header image 1440 x 496
back to articles

What if a debt is overdue and I don't have a written contract?

In the construction industry, it's never a good idea for a sub-contractor to carry out work without a written contract. But it happens. And it doesn't mean you can't recover an overdue debt.

Obviously, it's not an ideal situation. However, the simple fact that the customer didn't sign anything isn't a valid excuse for them not to pay up.

What's the legal situation?
The law of restitution features a general principle of 'unjust enrichment'. It means that no person or company should be able to profit at another's expense without making restitution for the reasonable value of any goods, services or other benefits that have been supplied to them. There are four criteria that must be met for unjust enrichment to apply:

  • the customer has been enriched by the receipt of the goods or services
  • the enrichment is at the expense of the claimant
  • the retention of the enrichment is unjust
  • there's no valid defence or reason for the claim to be rejected

What can you do to recover the debt?
In principle, the law is on your side. The first thing to do is to contact the customer and find out why the outstanding amount has not been settled. It may simply be a misunderstanding or an error. Alternatively, there may a minor issue which can be resolved easily. If the job has been signed off by the customer, make sure you have the relevant paperwork to hand when you make the call.

If the customer is withholding payment because of snagging issues, you should deal with these as soon as possible and get final sign-off on the job in writing.

What's the next step?
If you still don't receive settlement of the debt, the next step is to send the customer a letter, setting out the full details of your claim. This should include details of the verbal agreement you made with them for the work to be carried out, the date of this verbal agreement and where it was made i.e. on-site or via the telephone. You should also include a full description of what was agreed, the amount due, the original payment terms and a deadline for payment.

What about legal action?
If the customer still refuses to settle the debt, it's time to consider taking legal action. In some cases, simply sending a 'letter before action' and the risk of the customer receiving a County Court Judgment (CCJ) will be enough to do the trick. If not, you can proceed with court action or, if the debt is undisputed and over £750, you can petition the court for a winding-up order.

Why not get professional help?
Whether you're simply chasing an overdue debt or taking things to the next level with legal action, it can be a real asset to have the proven expertise and experience of a professional debt collection agency to support you.

At Redwood Collections, we have a strong track record of providing debt collection services for the construction industry. We’ll provide you with authoritative advice and guidance, as well as taking care of all the necessary debt collection procedures on your behalf, from proactively chasing the debt to handling all aspects of any legal action.

What's more, we pride ourselves on acting with integrity and professionalism to ensure that we protect your name and your customer relationships. With Redwood on your side, your business can Grow Stronger.

Email us at info@redwoodcollections.com.

Blog post embedded image 900 x 510px

How can we help?

From one-off bad debts to ledgers that require more regular attention, we’re here for you.

Tell us how we can help your business, please complete this form.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.