Making sure you Sue the correct entity
During your years in business you are likely to come to a time when you need to make a claim against someone for non-payment.
There are a number of things you can do to make sure the process runs smoothly and ensuring that you are suing the correct person is one of the most important things to get right.
Although it may seem like an obvious thing to get right suing the correct entity is not always easy. If the case goes to court under the wrong name and you restart the process in the correct name, your claim may be thrown out of court for an abuse of process. This is due to a rule whereby a defendant should not be subject to two sets of proceedings based on the same complaint. Certainly, when you need to enforce a judgment, if it’s in the wrong name, you will be unable to enforce and therefore wasted money and a considerable amount of time
We have listed below a quick information guide depending on the business type:
Limited company
If the company you are looking to take to court is a limited company then you must check the company name on Companies House, it must be 100% accurate. You must make sure to include both the trading address and the registered address (usually the address for service and for issuing a claim). It is worth noting that these two addresses are not always the same as companies often have their accountants as the registered office address or may have a separate Head Office with a different address to a branch.
Limited company ‘’trading as’’
Often a company will have a trading or brand name that is different to the legal entity. Corporates will often have multiple legal entities trading under the same branding. British Gas is a trading name for Centrica PLC. Centrica PLC has many different legal entities all trading under the British Gas brand, so it is vital to ensure you know which legal entity you are trading with.
This can also happen with franchises that cover all sectors. You are most likely not contracted to the franchisor but one of the franchises. For example Whitegate Estate Agents are a franchise, so your local Whitgates will be owned by a franchisee with a separate legal entity. Bob & Joe property Ltd t/as Whitegates Estate Agents. It may not be apparent on the surface that you are trading with Bob & Joe Ltd.
Brand names are very common in the hospitality industry or in bars/restaurants that are owned in a limited company structure or sometimes a sole trader or partnership. When writing your claim, it is important to include the trading name as well as the company name, for example; ABC Inns Ltd t/as High Street Café Bar.
Partnership
When suing a partnership, you can sue all partners involved in the partnership. To do this, its important to get the each partners full name, home address and date of birth as psrt of your due diligence when initially setting up the account. When writing your claim, you should write all the partners names followed by ‘partnership’ in brackets. It is useful to include each partner as 2nd/ 3rd defendants in the same matter so they will each receive the court claim at each home address.
Sole trader ‘’trading as’’
If you are looking to sue a sole trader that is trading as a business, then you should include both the individuals name and the company name in your claim e.g Jospeph John Smith t/as Smith’s autos. By doing this it gives you the option of enforcing against the assets of the individual if it is discovered that the business does not have sufficient assets to repay the debt. As mentioned above, you do need to obtain home address and date of birth for a proprietor to ensure you can enforce any judgment against their personal assets.
New Preaction protocols for debt claims
It is worth mentioning that the steps you need to take before instigating legal action against and individual ( which includes sole traders and partnerships if you are suing each partner individually as 2nd/ 3rd defendant) changed on 1st October 2017. There are now specific information you must include in any Letter Before Action and time limts for each step prior to using a court claim. Please see our blog for more details.
Getting to this point of debt collection can sometimes be avoided by having all your processes and procedures in place from the start. If you need any help with getting your credit management up to scratch get in touch.
