Common mistakes invalidating debt reconciliation minutes and solution
In commercial transactions, the risk of late payment or breach of payment obligations is a common issue among enterprises. To strengthen the legal basis for requesting payment or preparing a lawsuit dossier, enterprises often prepare Debt Reconciliation Minutes. However, dispute resolution practice shows that many Debt Reconciliation Minutes are declared invalid or rejected for their legal value by Courts or Arbitral Tribunals due to fundamental errors during their establishment. This article by TNTP will analyze these legal risks in detail and propose remedies for enterprises.
1. The legal role of debt reconciliation minutes
Debt Reconciliation Minutes are documents confirming the amount of money the Obligor must pay to the Obligee up to a certain point in time. These minutes are typically applied in cases of goods sale and purchase or service provision between two enterprises. From a legal perspective, this document plays a crucial role. Specifically, the legal role of Debt Reconciliation Minutes is demonstrated through the following aspects:
a. Determined as a source of evidence
According to Article 93, Article 94 and Clause 1, Article 95 of the 2015 Civil Procedure Code (“CPC”), Debt Reconciliation Minutes with lawful signatures and seals (originals or lawfully notarized/certified copies) are important evidence proving the payment obligation without undergoing the complex process of cross-checking all invoices and delivery documents.
In cases where the Obligor intentionally avoids payment by refusing to sign and affix a seal to confirm the Debt Reconciliation Minutes, the enterprise should still submit the Debt Reconciliation Minutes to the competent authority. Although in this situation, these minutes do not fully meet the conditions to be considered a complete source of evidence, they still possess significant reference value. When cross-checked and examined alongside other lawful documents in the case file, such as goods delivery receipts, invoices or bank transaction statements, the Debt Reconciliation Minutes will contribute to assisting the competent authority in accurately determining the actual debt amount between the parties.
b. Basis for restarting the statute of limitations for initiating a lawsuit
Under Article 157 of the 2015 Civil Code (“CC”), in cases where the Obligor acknowledges their obligations, such as through signing Debt Reconciliation Minutes, the statute of limitations for initiating a lawsuit shall restart. This statute of limitations will be determined depending on the nature of each transaction type. Debt Reconciliation Minutes serve as a critical legal basis, helping the Obligee protect their lawful rights and interests, especially in cases where the debt has existed for a long time and the original statute of limitations has expired or is at risk of expiring.
2. Common mistakes that invalidate debt reconciliation minutes
Many enterprises assume that merely having a signature and a seal makes the Debt Reconciliation Minutes valid. However, failure to properly review and signing of documents often leads to the following legal risks:
a. The signatory of the debt reconciliation minutes lacks authority
According to Article 12 of the 2020 Law on Enterprises, amended and supplemented in 2025 (“Law on Enterprises”), the legal representative of an enterprise is the individual representing the enterprise to exercise the rights and perform the obligations arising from transactions. In practice, Debt Reconciliation Minutes are often signed and confirmed by the chief accountant or sales staff. In the event the chief accountant or sales staff executes the signing without a valid power of attorney from the legal representative, these minutes will not automatically give rise to obligations for the enterprise, unless the enterprise subsequently acknowledges or approves it.
b. Lack of voluntariness, fraud or coercion
Debt Reconciliation Minutes only hold legal value when established based on the voluntary consent of the parties. If the Obligor can prove that the signing occurred under conditions of fraud, threat, coercion or concealment of information leading to an inaccurate confirmation of debt figures, the competent authority may declare the Debt Reconciliation Minutes invalid under the provisions of civil law.
c. Unclear information, fundamental discrepancies
Debt Reconciliation Minutes must clearly and specifically present information related to the debt. Recording in a generic manner without a specific basis for reconciliation will create difficulties for Courts or Arbitral Tribunals in determining the actual obligation. Debt Reconciliation Minutes may be rejected if errors exist, such as incorrect legal entity names, tax codes or failure to identify which transaction the debt arises from, corresponding to which specific value-added invoice or delivery receipt.
d. Missing signatures or seals or unauthorized alterations
The formal validity of the Debt Reconciliation Minutes is also a crucial factor affecting their evidential value. Where the Debt Reconciliation Minutes consist of multiple pages but are only signed and sealed on the final page, the lack of an inter-page seal on the preceding pages will compromise the document’s integrity. In such cases, Courts or Arbitral Tribunals have the right to reject the value of pages without the inter-page seal due to a lack of basis proving they have not been swapped or altered. Furthermore, signs of erasures or correction regarding the amount or time on the Debt Reconciliation Minutes without valid confirmation from the parties (initials) may also cause these minutes to be rejected by Courts or Arbitral Tribunals.
3. Legal consequences when debt reconciliation minutes are not accepted by competent authorities
Utilizing invalid Debt Reconciliation Minutes can lead to severe legal consequences, directly impacting the enterprise’s debt recovery capability during the dispute resolution process. Some common legal consequences are as follows:
a. Loss of an important source of evidence
In civil proceedings, lawful Debt Reconciliation Minutes constitute vital evidence with high evidential value before the Trial Panel or Arbitral Tribunal. When this document is invalid, the Obligee loses one of the key pieces of evidence to prove the payment obligation and the actual debt to the competent authority, thereby significantly diminishing the debt recovery rate.
b. Increasing the complexity of the case
Valid Debt Reconciliation Minutes serve as a solid evidentiary basis demonstrating that the Obligor voluntarily confirmed the payment obligation. If this document is rejected by the competent authority, the Obligor may deny the entire obligation, forcing the dispute resolution process to revert to the initial stage of cross-checking documents, adding to the case’s complexity.
Additionally, improper preparation of the Debt Reconciliation Minutes or execution without proper authority may give rise to disputes concerning the document’s legal value. In reality, the Obligor often exploits these errors to deny the validity of the aforementioned minutes to delay or evade payment obligations. Consequently, Courts or Arbitral Tribunals must not only resolve the debt dispute but also examine the legality of the Debt Reconciliation Minutes, thereby prolonging the proceedings.
c. Impacting the statute of limitations for initiating a lawsuit
In cases where the original statute of limitations has expired, Debt Reconciliation Minutes act as an essential document aiding the Obligee in reinstating the right to sue. Pursuant to Article 157 of the CC, the Obligor’s acknowledgment of part or all of their obligations to the plaintiff is a basis for recalculating the statute of limitations. However, when the Debt Reconciliation Minutes are unrecognized, this legal mechanism cannot be applied, leading to the risk of the debt becoming time-barred.
d. Increasing the burden of proof
According to procedural principles, the burden of proof rests on the plaintiff. In the absence of valid Debt Reconciliation Minutes, the enterprise is compelled to resubmit the entire system of original documents, such as contracts, invoices, goods delivery receipts and payment vouchers. Consequently, the enterprise’s burden of proof will increase significantly. Should the enterprise provide incomplete or disconnected documents and evidence, there is a substantial risk that the competent authority will reject part or all of the lawsuit claims, meaning the enterprise may only recover a portion of the debt.
4. Recommendations and solutions
To control risks and enhance debt recovery efficiency, enterprises must establish a strict record management mechanism while applying appropriate recommendations and solutions as follows:
a. Risk precautions when preparing debt reconciliation minutes
• Ensure compliance with formal requirements: The document must be clear and free from any erasures or unauthorized alterations. Especially, the corporate seal must be affixed properly (the round seal on the authorized person’s signature, and an inter-page seal if the Debt Reconciliation Minutes span multiple pages) instead of merely using a superficial hanging seal.
• Accurately cross-check information: Debt figures on the Debt Reconciliation Minutes must be cross-checked and absolutely match other documents such as value-added invoices, warehouse release slips, goods delivery minutes, etc.
• Clearly demonstrate voluntary intent: Debt Reconciliation Minutes must clearly show the Obligor’s confirmation of the payment obligation, avoiding ambiguous terms that might cause misunderstandings about coercion or imposition of will.
• Strictly control signing authority: Require the partner’s legal representative to directly sign and affix the seal to the Debt Reconciliation Minutes. Should the signatory confirming the debt not be the legal representative, require the enterprise to provide a valid Power of Attorney.
b. Solution when debt reconciliation minutes are invalid
• Re-execute new debt reconciliation minutes: Proactively contact the partner to re-confirm the debt and request the authorized person to re-execute the Debt Reconciliation Minutes.
• Gather supplementary evidence: If the Obligor fails to cooperate, it is necessary to collect documents such as delivery receipts, value-added invoices, debt exchange emails from the enterprise’s official domain name or establish a bailiff’s official transcript to record exchanges via messages or calls.
• Utilize cash flow as proof: If the Obligor has made a partial payment of the obligation after the establishment of the Debt Reconciliation Minutes and the transfer content clearly states the purpose, this serves as crucial evidence proving the Obligor’s acknowledgment of the obligation. However, it should be noted that this payment does not equate to the Obligor fully acknowledging the debt. For the remaining debt, the enterprise still bears the ongoing burden of proof.
Debt Reconciliation Minutes, despite being procedural in nature, play a significant role in determining obligations and resolving disputes. Thoroughly reviewing the legality and evidential value of this document before initiating legal proceedings is a prerequisite for building an effective and legally secure debt recovery strategy.
The above is an article on “Common mistakes invalidating Debt Reconciliation Minutes and solution”. In case your enterprise faces difficulties during the debt recovery process, please contact TNTP for timely assistance.
