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E-library Commercial Contracts Debt recovery (French business law)

Debt recovery (French business law)

12 Mar 2011

What should you do if your debtor does not pay?

Make an analysis of your contract to determine the exact amount that you may claim

In addition to the unpaid amount for the services that you have provided or the products which you have delivered, you will also be entitled to claim penalties for late payment. To determine the amount of such penalties, you should verify the provisions of your contract. In the event that the agreement contains no penalty clause, interest for late payment provided for by applicable law should apply.

Send a notification to the debtor to pay (“mise en demeure”)

The notification to pay (“mise en demeure”) should preferably be drafted and sent by a lawyer. The notification should:

  • State the amounts due by the debtor for the services or products provided by the creditor
  • Make reference to the provisions of article L. 441-6 of the French Code de Commerce (Commercial Code) regarding payment terms and penalties for late payments
  • Indicate the creditor’s intention to obtain payment of the amounts due by the debtor by bringing, if necessary, legal action.

A simple notification to pay (“mise en demeure”) is often sufficient to convince a solvent debtor to pay without delay.

Apply for an injunctive order (“injonction de payer”)

If the debtor does not pay spontaneously, the creditor may apply for an injunctive order ("injonction de payer"). This procedure is regulated by articles 1405 and seq. of the French Code de procédure civile (code of civil procedure). It may be used when the amounts claimed by the creditor result from a contract or other commercial documents. The creditor’s request for an injunctive order must be sent to the President of the competent Commercial court (Tribunal de commerce) if the amounts due result from commercial dealings (“relation commerciale”). The request must be made in writing and accompanied by the relevant documents ascertaining the amount due. If the judge considers the claim well-grounded, he/she will issue an injunctive order obliging the debtor to pay (“injonction de payer”). The injunctive order must be notified to the debtor by bailiff. The debtor may contest the injunctive order within a period of one month after its notification. If the injunctive order is contested by the debtor, the judge will convene a hearing, during which both the debtor and the creditor will be heard, and render a decision.

In the event that there is a risk that the creditor may not recover the amounts due by the debtor, summary proceedings to seize the debtor’s bank account and/or assets may be introduced.

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