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If you are seeking payment from a debtor, not only is it important that you correctly identify the debtor (the entity that you need to pursue and potentially take legal action against), but also correctly identify yourself!

For example, there have been instances whereby we have acted for a company who is part of a larger group of companies whereupon it transpires during the course of legal proceedings that the company who issued proceedings against the debtor was not the company who entered into the contract giving rise to the debt in question.  When pursuing outstanding commercial debts, only the parties to the contract can take legal action arising from it. There was a mistaken belief that the parent company was responsible for contracting on behalf of all its subsiduary companies and therefore the parent company had the legal entitlement to pursue parties under such contracts. This may not be the case.

We have also dealt with cases whereby various different documents make reference to different group companies at different contracting stages e.g. the terms and conditions refer to the name of one company within the group, order acknowledgements state another, email footers then identify otherwise and invoices have then been raised by an entirely different group company.

Every company in a group is independent and it has its own company number.  Only the company within the group which has contracted with the debtor is  entitled to bring proceedings.  It is therefore imperative that in each particular contract that there is no “mixing up” of companies and it clear from the outset who the contracting party is intended to be. Otherwise, if you sue a debtor but as the incorrect company within your group, not only could this be perceived as a weakness on your part in that you did not even know yourself who contracted with the debtor, it can also have significant legal cost implications should there be need to substitue the Claimant in legal proceedings after the claim has been issued.

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