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Avoiding Customer Debt with Documentation

Documentation Makes all the Difference Between What You Think You’re Owed and What you Can Prove You’re Owed

The concept of a “Gentleman’s Agreement” is fast going out of fashion and no longer serves any purpose for businesses, both in Britain and overseas.  A gentleman’s agreement is a verbal understanding between two parties and, technically, it may be enforceable under specific contract law, as long as certain criteria relating to contracts are met.  However, if everything is done on a handshake and a nod, with nothing written down, proving an issue such as the intention to enter into a contract is nigh on impossible. 

Worryingly, there are still people who so strongly believe in the concept of a gentleman’s agreement that they are prepared to lay out cash on the basis of another party’s word or promise!   The law relies heavily on proof – proof of an agreement to pay for products or services that are not always delivered. 

The golden rule for business is that if you purchase anything, then you should obtain a receipt.  This means that if whatever you paid for is not delivered, you have proof that you are owed a refund.  In a similar manner, if you sell goods or provide services, you should get a written agreement on the terms of sale.

This has become more of a problem for the ever-increasing army of contractors and freelance workers in recent years, they often make a verbal agreement over the phone, but don’t back this up with a contract or written confirmation.  When it comes time for payment, a surprising number of clients have a very differing recollection of what was agreed in a phone call, especially when it comes to the price agreed for the work being undertaken.

In order to make sure that you are always able to prove the sum that you think is owed to you, there are some measures you can take:

Carry out a simple background check to avoid fraudulent paperwork.  Once you’ve handed over goods or money, proving the identify of fraudsters who owe you money will be challenging. 

Always detail the terms of any verbal agreement in writing.  Even in cases where you don’t obtain a formal contract, write down in an email or letter what was agreed upon, with the date of the agreement, the names of the people involved in the conversation and send to the other party, asking for confirmation that they are in agreement with what you have detailed in writing.

If you are dealing in cash, make sure you always obtain a written receipt.

Check details carefully to make sure the contact information of any party you deal with matches the people you think you are dealing with in order to avoid fraud. 

If something doesn’t “feel” right, listen to your intuition and check it further before committing to provide goods or services.