DEBT RECONCILIATION IN CIVIL PROCEEDINGS
“Debt reconciliation” means the parties in a contract to compare and confirm the debts that one party must pay to the other under the contract figures, the actual transaction, and other evidence proving that these figures are correct. However, in reality, many enterprises do not attach importance to debt reconciliation, this leads to difficulties in proving debts that enterprises request the Court to settle when disputes arise between parties. Therefore, for the satisfactory settlement of the dispute, the parties need to be aware of the important role of debt reconciliation in civil proceedings. What are the conditions the Minutes of debt reconciliation must meet to be considered as evidence? In this article, TNTP gives legal shares and clarifies these issues.
1. Definitions of Minutes of Debt reconciliation/Debt confirmation and Debt payment request
Minutes of Debt reconciliation/Debt confirmation (hereinafter referred to as Minutes of Debt reconciliation) is a document (or other equivalent forms) made between parties to confirm the debts that one party is obliged to pay to the other party. Minutes of Debt reconciliation is usually applied to the contract for the sale of goods or the provision of services.
A Debt payment request is a document made by an obligee (usually the seller of goods or service provider) and sent to an obligor (usually the purchaser of goods or service user) to request the obligor to pay the debt as agreed between the parties.
2. Conditions for the Minutes of Debt reconciliation and the Debt payment request to be considered evidence
Article 95.1 of the 2015 Civil Procedure Code stipulates that: “Contents-readable materials shall be regarded as evidence if they are originals or copies lawfully notarized or authenticated or supplied and certified by competent agencies or organizations”. Accordingly, the minutes of Debt reconciliation and the Debt payment request are documents made, signed, stamped, and confirmed by the parties under the contract, so that the evidence provided by the parties must be the original or the notarized or authenticated copy.
(i) For the Debt payment request:
A Debt payment request is a document unilaterally established, signed, and stamped by the obligee. Therefore, the Debt payment request regularly is fully signed and sealed by the legal representative of the obligee and considered as evidence. The obligee may submit the original or the notarized or authenticated copy to the Court. However, the Debt payment request is not meaningful in proving the debt value without the signature and seal of the obligor. The obligee may completely object to the debt amount requested by the obligee. In this case, the obligee still has to take other measures to prove the debt’s value under the obligee’s request.
(ii) For the Minutes of Debt reconciliation:
Minutes of Debt reconciliation is a document established by the parties in the contract, fully signed and sealed by both parties. In addition, the Minutes of Debt reconciliation usually clearly states the debt amount that the obligor must pay to the obligee. The obligor’s confirmation, signature, and seal on the Minutes of Debt reconciliation mean that the obligor acknowledges the value of its debt. Therefore, the Minutes of Debt reconciliation is considered as essential evidence in determining the value of the debt that the obligor must pay to the obligee.
However, the Minutes of Debt reconciliation is only considered evidence when both parties’ signatures and seals on it. If without the signature and seal of the obligor, the Minutes of Debt reconciliation cannot be notarized or authenticated at a competent agency, and even if the petitioner submits the original at the Court, it cannot be considered as evidence. Therefore, if a dispute arises, the enterprise should note the obligor’s confirmation during making the Minutes of Debt reconciliation and request the obligor to sign and seal the Minutes for submission to the Court.
In case the obligor refuses to sign and seal the Minutes of Debt reconciliation to avoid the payment, the obligee should still submit the Minutes to the Court when filing the lawsuit. Although the Minutes of Debt reconciliation is not considered evidence, it is still valuable as a reference to determine the debt when compared with other evidence and documents in the lawsuit dossier, such as receipts of goods delivery, bank statements for payment installments…
On principle, the Minutes of Debt reconciliation must be confirmed, signed, and stamped by the lawful representatives of the parties. However, in reality, there are many cases where the Minutes of Debt reconciliation is signed and confirmed by the obligor’s accountant. In these cases, the accountant may not have the authority to represent or exceed the scope of representation when entering into Minutes of Debt reconciliation. However, if the obligee can prove that the obligee’s lawful representative: (i) has recognized the accountant’s confirmation of the debt; (ii) was aware of the accountant’s confirmation of the debt without its objection; or (iii) issued a Power of Attorney for the accountant to confirm the debt, the Court will still accept the debt confirmation of the obligor’s accountant and the Minutes of Debt reconciliation is considered as evidence. Concurrently, the obligee should send a written notice to the obligor informing that the obligor’s accountant has confirmed the debt amount and requesting the payment. The written notice should be sent by courier service with the advice of delivery for clear evidence proving that the obligor already received it. At that time, the obligor is not able to argue against the fact that the legal representative was aware of the accountant’s debt confirmation without its objection.
In light of the above, it is said that debt reconciliation plays an important role in the parties’ performance of the goods sale or services provision contract. Accordingly, TNTP hopes this article will help you pay more attention to debt reconciliation, especially in entering into the Minutes of Debt reconciliation and Debt payment request to have lawful evidence in the dispute settlement at the Court.
TNTP & Associates International Law Firm