“Debt reconciliation” is a familiar terminology in commercial business disputes. “Debt reconciliation” can be understood that the parties in an agreement or contract execute the reconciliation and confirmation of the debt or the money that one party must pay to the other party. During the performance of the Contract, many enterprises do not pay attention to the debt reconciliation or do it cursorily. This leads to the situation when a dispute occurs, the plaintiff is confused in proving the value of money which they request the Court to settle because the Debt Reconciliation Report is not accepted by the Court as evidence. So which conditions must the Debt Reconciliation Report meet to be considered as evidence? What is the value of debt reconciliation in civil proceedings? To answer the above questions, TNTP will provide legal shares on debt reconciliation in civil proceedings.
1. What are the Debt Reconciliation Report/ Debt Confirmation and the Debt Payment Request/Letter of Demand?
Debt Reconciliation Report/ Debt Confirmation (collectively referred to as Debt Reconciliation Report) is a document signed by both parties to confirm the debt that one party is obliged to pay to the other party. Debt Reconciliation Report is usually applied to sale contracts or service supplying contracts between two enterprises.
Debt Payment Request/ Letter of Demand (collectively referred to as Debt Payment Request) is a unilateral document signed by the party having right (usually is the goods seller or the service supplier) and sent to the party having obligation (usually is the goods buyer or the service user) to remind and request the party having obligation to pay the debt under the agreement between the parties.
2. Are the Debt Reconciliation Report and the Debt Payment Request automatically considered as evidence?
According to Clause 1, Article 95 of the Civil Procedure Code 2015, a readable document is evidence if it is an original or a copy which is legally notarized or certified or provided, confirmed by a competent agency or organization. However, the Debt Reconciliation Report and the Debt Payment Request are documents signed, stamped, and confirmed by the parties according to the contract or agreement, so they will not be issued, provided, and confirmed by the competent agency or organization. Therefore, the Debt Reconciliation Report and Debt Payment Request are considered as evidence if it is the original or a legally notarized or certified copy.
- For the Debt Payment Request: Debt Payment Request is a unilateral document signed and stamped by the party having the right. Therefore, it is easy to obtain the signature and stamp of the legal representative of the party that has the right. In this case, the enterprise can submit the original or a copy notarized or certified by a competent authority and it will be considered as evidence. However, the Debt Payment Request doesn’t make much sense in proving the value of the debt because it does not have the signature and stamp of the party having obligation. In case the party having right submits the Debt Payment Request to the Court but the party having obligation counter the value of the debt provided by the party having the right, the party having the right will face difficulties and still have to prove the value of the debt the party having right requested the party having obligation to pay.
- For the Debt Reconciliation Report: The Debt Reconciliation Report is a document signed and stamped by both parties. In addition, the Debt Reconciliation Report must clearly state the money that the party having obligation must pay to the party having the right. Therefore, if the party having obligation signs and stamps the Debt Reconciliation Report, it means that the party having obligation has admitted the value of the debt. Thus, if the Debt Reconciliation Report is considered as evidence, it will have an important value in determining the debt which the party having obligation must pay to the party having the right.
However, the Debt Reconciliation Report is only considered as evidence if there are full signatures and stamps of both parties. If the Debt Reconciliation Report does not have the signature and stamp of the party who has obligation, it cannot be certified at the competent agency, even if the petitioner submits the original at the Court, it will not be accepted as evidence. Therefore, enterprises should note that when making a Debt Reconciliation Report, the party having right must request the party having obligation to sign and stamp for confirmation so that they can submit evidence to the Court in case disputes occur and the party having right litigates.
In case the party having obligation refuses to sign and stamp for confirmation to avoid payment, the enterprise should submit it to the Court, though. In this case, despite that the Debt Reconciliation Report is not considered as evidence but it can be used for reference and determination of the debt value if it is compared with other evidence and documents in the case’s file such as delivery notes, bank statements of payments, …
In addition, another case is the Debt Reconciliation Report signed and certified by the accountant/chief accountant. In principle, the Debt Reconciliation Report must be signed by the legal representative, however, in case the accountant signs, the legal representative knows but does not counter, it will be considered as they have agreed with the debt value and the Court will still accept it if the party having right can prove that the legal representative knew but did not counter. In this case, the solution which the enterprise can apply is when sending the Debt Reconciliation Report, if the accountant signs it, the enterprise should send a written notice of the accountant’s confirmation of the debt and request the party having obligation to pay. The sent document must have Accounts Receivable (AR) to provide clear evidence, then the party having obligation will not be able to counter the fact that the legal representative has known but did not counter the accountant with his/her signature for the debt confirmation.
Based on the analysis above, it can be seen the importance of the Debt Reconciliation Report in commercial operations today. Through this article, TNTP has provided issues related to the Debt Reconciliation Report, especially the signing to confirm the Debt Reconciliation Report between the parties so that the Court would accept as evidence, thereby settling the plaintiff’s requests. TNTP hopes that this article is useful to you.
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TNTP & Associates International Law Firm
Lawyer Nguyen Thanh Ha