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Non-Paying Customers in Spain

We are a UK company that sent a shipment of our products to a distributor in Spain without billing in advance as normal (an oversight due to a seasonal rush).

The distributor has failed to pay, offering various excuses, including that the shipments did not match their orders, which is patently untrue. Given that we did not sign any specific contract with this distributor, what are our rights in this situation?

According to Article 50.1 of the Spanish Civil Code, as the debtor has his residency here in Spain, the Spanish courts are competent to judge this legal issue. Even so, it would be advisable to sign a contract (in Spanish) which specifies that, in case of dispute, the parties designate the Spanish Courts as competent, as this will facilitate searches to be carried-out with regard to the financial position of the breaching party and any assets they have.

While certainly it does appears that you have emails from the distributor asking you for some products, on the other hand it is important to be in possession of an email sent to the distributor in which appears a summary of the price you expect the distributor to pay for a specific quantity of particular products with the total price in Sterling or Euros that you are now claiming from him.

Moreover, you should be in possession of the specific email that the distributor sent to you agreeing to the order or alternatively, the email to which is attached the invoice with his signature.

It may well be that the invoice appears in one of the emails as an attached file, in which case you are obliged to hire a notary in the UK who will certify the contents of those emails and certify that the invoice appears as an attached file in one of them.

The Spanish legislation is very formal in this sense: If we cannot prove in court that the invoice exists in one of the emails as an attached file it´s going to be difficult to succeed in any proceedings for the recovery of the debt. However, once demonstrated that the order was received and approved by the distributor we can pursue the matter in court for recovery of either the amount of the order or the return of the products if this is an appropriate remedy. In addition, you may seek full payment of your legal costs and the costs of recovery.

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Debt Collection

Available in the following locations: Alicante, Arrecife, Benidorm, Cadiz, Castellon, Córdoba, El Campello, Estepona, Fuengirola, Gandia, Granada, Jaen, L`Eliana, La Manga del Mar Menor, Las Palmas, Los Alcázares, Los Cristianos, Madrid, Maspalomas, Mazarron, Murcia, Orihuela Costa, Oviedo, Palma de Mallorca, Puerto del Rosario, Puzol, Seville, Torrevieja, Valencia, Vera, Vigo.

* If your local town is not listed, a lawyer from our nearest office will be happy to assist you.

Location

1Who is this Service for?

Anyone with experience running a business will have unfortunately been forced at some point to chase debtors for failing to pay for goods or services supplied.

Or perhaps a loan has been made and never repaid. Hopefully, a formal legal demand will be sufficient to ensure prompt repayment.

If not, other measures can be taken to enforce your rights, around the world.

2What does this service consist of?

  • Expedite and facilitate the collection of unpaid debts
  • Improve collection rates and where possible preserve existing business relationships
  • Collection is achieved either through extrajudicial or judicial procedures
  • Ensure a value-for-money service
  • All cases are undertaken with the strictest confidence and the clients are regularly kept up-to-date

3Fees

The Intelligent Debt Recovery Service provided by the English-speaking lawyers on the Advocate Abroad network allows you to take control and to begin the process of recovering outstanding debts in Spain – regardless of where you are located in the world.

Furthermore, you can do so without having to make any advanced payment for the services of any kind when choosing the no-win-no-fee option*.

* Please note, this does not include costs involved with Court Proceedings.

 

4Procedure

Negotiation With Debtors

Should the need arise, the lawyers on the Advocate Abroad network are experts in carrying out negotiations with debtors and will negotiate on your behalf for the return of the debt and will manage a debt plan with the debtor where you have provided us with full prior authorisation.

Obtaining all of the monies that you are owed is of course the primary objective here though you may decide that obtaining a percentage or the full amount over a period of time are acceptable alternatives.

Financial Report Before Going to Court

  • Going to court is a last resort but one that can be necessary in order to obtain a successful outcome. We should only really consider going ahead when all of the information relating to the debtor tells us that this will be a worthwhile strategy.
  • It is possible to obtain valuable information about the financial position of Spanish individuals and companies from a number of important sources. This would include:
  • The commercial register which contains a host of information about companies such as fixed assets and annual returns;
  • The property register which holds information on any assets registered in the names of individuals including sole traders;

The RAI register which contains valuable reports of any previous failure by the company to pay creditors Advocate Abroad can arrange for a report to be drawn-up and a recommendation to be provided – by specialist lawyers – on whether to pursue the debtor in the Courts.

It is strongly recommended to obtain a financial report before proceeding to take court action.

Court Process

If the measures taken extra-judicially fail to recover the debt and the financial report (recommended) suggests that it would be worthwhile to continue pursuing the debtor, the next stage is to bring the matter before the courts.

This effectively means using the ‘Proceso Monitorio’ which is a special court process specifically set-up for the speedy resolution of outstanding debts which cannot exceed €250,000.

Upon presentation to the court of the petition together with supporting documentary evidence (contracts, invoices etc) the court will decide whether there is a sufficiently substantial case for the debt to be repaid.

The debtor is then informed by the court of the petition and at this stage there are three possible outcomes:

1. Debtor Agrees To Pay The Debt

In 45% of cases brought via the ‘proceso monitorio’ the matter is resolved at this point with the debtor agreeing to pay the creditor the amounts owed.

2. Debtor Does Not Respond or Appear in Court

If the debtor fails to respond to the court action or doesn’t turn-up at the hearing then the judge may place an embargo on any assets or income of the debtor to force repayment of the amount owed. 39% of cases are resolved in this fashion.

3. Debtor Opposes Payment of the Debt

If within a timeframe of twenty days the debtor opposes the action and does so in writing then it becomes necessary for the court to hear arguments from both sides. The debtor will require documentation to support their case. The debtor opposes the debt in this way in 16% of cases.

 

Support services

5Free Support Services Included

When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

  • Verification of the regulatory status of your professional.
  • Fees as recommended by the Local Professional Body
  • Fees specified in advance and legally guaranteed.
  • Service levels agreed in advance and guaranteed.
  • All professionals must hold professional indemnity insurance.
  • Professionals' proficiency in English monitored.
  • Continuous quality controls and reviews.

Why choose Advocate Abroad?

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