Owed money without a contract or agreement

When you are owed money, hindsight can be a wonderful thing.

All too often in the rush to complete a business transaction or lending money to a friend in need, you won't think to put in place a legally binding agreement that formalises the arrangement beforehand. After all, you have every intention of holding up your end of the deal and so assume the other party will too.

But if payment doesn't happen and your previous agreement starts turning into a dispute over what is owed, you may need to consider what legal avenues are open to you to get your money back.

The success of any legal action will then depend on what evidence you can provide to show that the debt is owed.

Can you take someone to court for owing you money?

Yes, but the 'burden of proof' will be on you as the Claimant to show that the amount you are claiming is due. Court should be your last resort in attempting to recover your money and so you should be confident that you have a strong case, sufficient evidence and follow the set pre-action procedure prior to issuing a claim (e.g. sending a letter before action, attempting negotiation etc.)

Ultimately the decision on who owes what will be down to a judge's ruling based on:

1. The applicable law (i.e. breach of contract)
2. The evidence that you can provide
3. The evidence supplied by the defendant/debtor
4. The balance of probabilities

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Owed money but no contract!

SMS or messages on social media can help prove a debt is owed.

In the absence of a written contract or agreement being in place, there are various other pieces of information that you may be able to secure which can provide evidence that the money is due.

Bounced cheque or returned direct debit
While the use of cheques is diminishing, hundreds of millions of cheques are still issued every year. If your debtor has sent you a cheque that bounced or agreed to a direct debit that has been returned, it is often all the evidence that you need to prove a debt is owed.

In law a cheque is considered a 'promise to pay' and so can be used as a clear admission that money is due.

Unpaid invoices
It is not uncommon for a business to invoice without a contract. Most businesses use invoices to request payment so providing copies and proof of them being issued to a customer or supplier will go a long way in proving that a debt is owed, even if they aren't directly attached to Terms of Business or a contract.

Furthermore, if you provided regular statements of the amounts owed and showing overdue, then these will also be useful as evidence.

Evidence of chasing debts
Once a payment is overdue you will have hopefully contacted the person or company to chase the debt.

Emails, letters, texts or messages exchanged on social media (Facebook, Twitter etc.) can all be used to help prove a debt is owed and overdue.

If the other party has responded to you apologising or asking for more time, then this admission will be extremely valuable in proving that they don't dispute that they actually owe the debt. So, it's important that you save or screenshot these messages in the event they are needed.

Loaned money without a contract
Without an I.O.U. or a loan agreement in place, proving that money provided to someone was a loan that needs to be repaid can be difficult. This is because often money given to friends, an ex, or family member is considered a gift and so isn't required to be paid back.

Enforcing a verbal agreement that money is owed will hinge around providing evidence to show that the cash was transferred as a loan along with any repayments e.g.

• A bank statement showing a transfer or cheque to the person's bank account
• Repayments received into your account that stopped
• Your account history that large cash gifts are not made to the person on a regular basis
• Evidence of your income, outgoings and savings showing it's unlikely that you could afford to give the amount as a gift

Witnesses to the arrangement
When little or no documentation exists to prove a debt, having an independent witness to a verbal contract can be invaluable.

For example - with a business transaction, did an employee take the order over the phone, deliver goods or perform a service where payment was verbally agreed with the customer? If money was lent to a friend, was another person present to witness the agreement of how/when they were going to pay you back?

But even if an independent witness isn't available, you as a claimant can also present your version of events to the court in a written witness statement. Any witnesses may then need to attend court should the claim go all the way to a hearing.
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Debt disputes with no contract.

Without a written agreement, there should still be plenty of information that you can pull together to prove what you are owed. However, if the other party disputes the amount, or that any debt is owed at all, then you may have a fight on your hands that needs to be settled in court.

It will then be down to the evidence you can gather and how your claim is pleaded to convince a judge that you are entitled to the money owed in the absence of a legally binding written contract. So, obtaining legal advice on the evidence needed for a debt recovery claim and your prospects should be your starting point.
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Need to recover a debt?

Our lawyers can write a Letter Before Action to your debtor and provide a range of fixed fee services to help you get back what you are owed.

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