CONTENTS
- 1. Price of Goods | Lawsuit Claiming the Price of Goods
- 2. Price of Goods | Procedure for the Lawsuit on the Price of Goods
- 3. Price of Goods | Points to Note Before the Lawsuit
- - Extinctive Prescription
- - Provisional Attachment and Provisional Injunction
- - Sending a Certified Notice of Contents
- - Methods of Response Outside of Litigation
- 4. Price of Goods | Related Precautions
- 5. Price of Goods | Methods of Response
- - Securing Evidentiary Materials Systematically
- - Sending a Certified Notice of Contents
- - Filing for a Payment Order
- - Filing a Small Claims Adjudication
- - Applying for Compulsory Execution
- - Checking and Extending the Extinctive Prescription of a Claim
- - Other Points to Note
- 6. Price of Goods | Key Issues
1. Price of Goods | Lawsuit Claiming the Price of Goods
A lawsuit claiming the price of goods is a legal procedure for recovering an unpaid amount through legal process.
If you deliver goods in accordance with the terms of a goods supply contract but the buyer fails to pay the price for those goods, you can be placed in a very difficult situation.
You may trust the contract with the other party and wait for payment, but if the nonpayment situation continues for a long time, your own company's financial condition may be threatened.
In such a case, you can file a civil lawsuit claiming payment of the price from the other party through the court.
This is precisely the lawsuit claiming the price of goods.
The requirements for filing a lawsuit claiming the price of goods are as follows.
▶Existence of a goods supply contract
-A written contract is advantageous, but even an oral contract can be recognized if there is an actual record of the transaction
-Proof is easier if the contract specifies the delivery schedule, items, quantity, price, and payment due date
▶Completion of delivery of the goods
-It must be proven that the goods were actually supplied to the other party
-Invoices, delivery slips, transaction statements, waybills, shipping certificates, and the like are key materials
▶The fact of nonpayment of the price
-It must be possible to prove that the price was not paid within the agreed due date
-A confirmation of outstanding amounts, bankbook transaction records, a certified notice of contents, and the like are the main evidence
2. Price of Goods | Procedure for the Lawsuit on the Price of Goods
A lawsuit claiming the price of goods proceeds according to the ordinary civil litigation procedure. The main steps are as follows.
▶Securing evidentiary materials
-Contracts, transaction statements, shipping documents, invoices, emails, text message records, and the like
-This includes all materials that can prove the fact of the other party's nonperformance of the obligation.
▶Preparing and submitting the complaint
-Submit to the court with jurisdiction a complaint stating the amount claimed, interest, the date of performance of the contract, the payment due date, and the like
-Generally, the court with jurisdiction over the defendant's address or over the place of performance of the contract has jurisdiction
▶Pleading date
-The plaintiff (seller) and the defendant (buyer) appear in court to state their respective positions, submit evidence, and support their arguments.
-Procedures such as witness examination may proceed concurrently
▶Pronouncement of judgment
-Based on the evidence, the court determines whether to order payment of the price
-If the plaintiff wins, the confirmed written judgment functions as a title for execution for compulsory execution
3. Price of Goods | Points to Note Before the Lawsuit
Let us examine the points to note that should be confirmed before a lawsuit on the price of goods.
Extinctive Prescription
An ordinary claim for the price of goods is regarded as a commercial claim, and its extinctive prescription is 3 years.
That is, once 3 years have passed from the payment due date, the exercise of the claim itself may become impossible, so the deadline must be confirmed without fail.
However, if a confirmed judgment is obtained, the prescription is extended to 10 years.
Provisional Attachment and Provisional Injunction
If, before or during the lawsuit, there is a concern that the other party may conceal or dispose of assets, you can attempt to secure the claim through provisional attachment or a provisional injunction.
In particular, if the other party's ability to pay is in doubt or there are signs that the company intends to close down, this is a necessary measure.
Sending a Certified Notice of Contents
As a final warning measure before a legal dispute, by formally conveying the intent to claim the price, it serves as supporting material for interrupting the prescription and for subsequent procedures.
Methods of Response Outside of Litigation
Not all price disputes are resolved only through litigation.
You may also seek a quicker resolution through the following methods.
▶Filing for a payment order
This is a system by which the court orders the debtor to pay money based only on a simple review of documents.
If the debtor does not raise an objection, the order is given the same effect as a confirmed judgment, and compulsory execution becomes immediately possible.
It is very effective particularly when the amount of the price is clear and the possibility of dispute is low.
▶Small claims adjudication system
This is a simplified litigation procedure available when the amount claimed is 30 million won or less, and it proceeds more quickly and simply than an ordinary civil lawsuit.
However, if a dispute by the other party is anticipated, conversion to an ordinary civil lawsuit should also be considered.
4. Price of Goods | Related Precautions
Let us examine the precautions related to the price of goods.
▶The importance of keeping transaction records
Contracts, tax invoices, emails, invoices, delivery documents, and the like become the most important means of proof should a legal dispute arise in the future, so they should be kept thoroughly at all times.
▶Clarifying the contract terms
The payment due date, method of payment, delivery conditions, and the like must be clearly stated in the contract or quotation. An unclear contract can lead to unfavorable results should a dispute arise.
▶Preparing a strategy to respond to the other party
There are also many cases in which the other party siphons off assets or denies the fact of nonperformance. Therefore, there is also a need to disperse risk at the early stage of the transaction by using a contract deposit, goods-price guarantee insurance, or the like.
5. Price of Goods | Methods of Response
Let us examine the methods of responding to a lawsuit claiming the price of goods.
Securing Evidentiary Materials Systematically
What determines victory or defeat in a lawsuit is ‘evidence.’
In the case of a claim for the price, the following materials are important.
-Tax invoices, transaction statements, invoices: documents that can prove the fact of the supply of goods and the amount
-Delivery confirmations, shipping certificates, waybills: prove that the goods were actually supplied
-Text messages, emails, and KakaoTalk messages related to payment of the price: circumstantial materials showing that the other party was aware of the obligation to pay the price
It is good to keep all of these materials in paper or electronic file form and to organize them by date for later submission to the court.
Sending a Certified Notice of Contents
Before filing a lawsuit, a formal certified notice of contents by mail has the effect of warning the other party of the commencement of legal procedures.
-In accordance with the goods supply contract concluded with your company on ○○ year ○ month ○ day, goods worth ○○○ won were delivered, but the price was not paid by ○ month ○ day.
Accordingly, through this certified notice of contents, we request payment, and we inform you that a civil lawsuit may be filed in the event of nonpayment.
Filing for a Payment Order
Even without a lawsuit, you can attempt to recover the price using the simplified civil procedure known as a payment order.
This is a system by which the court unilaterally orders the debtor to pay the price, and if the other party does not raise an objection within two weeks, it immediately takes the same effect as a confirmed judgment.
Filing a Small Claims Adjudication
If the amount claimed is 30 million won or less, you can file a small claims adjudication.
It is simpler in procedure than an ordinary civil lawsuit and has the characteristic of being concluded more quickly, as the court encourages mediation and the like.
-Visit the civil affairs office of the court with jurisdiction or use electronic litigation
-After preparing the complaint, pay the service fee and stamp tax
-When appearing in court, the party in person may make statements directly
Applying for Compulsory Execution
If a judgment or payment order has become final, you can carry out compulsory execution against the other party's property on that basis.
The main execution methods are as follows.
-Attachment of bank accounts
-Attachment of real estate
-Attachment of automobiles, claims, and similar assets
Checking and Extending the Extinctive Prescription of a Claim
A claim for the price of goods is a commercial claim, and its extinctive prescription is three years.
Within that period, you must interrupt the prescription by sending a certified content letter, filing a lawsuit, or applying for a payment order, or obtain a final judgment to extend it to ten years.
Other Points to Note
If the other party denies the payment of the price or asserts defects in the goods, a legal dispute is likely, so the assistance of a professional is necessary.
Filing a suit when the evidence is insufficient can instead create the risk of dismissal of the claim.
Even after obtaining a final judgment, actual recovery may be difficult if the other party has no assets, so identifying the other party's asset status at an early stage is important.
6. Price of Goods | Key Issues
A lawsuit claiming the price of goods does not necessarily result in a favorable judgment simply by asserting the fact of nonpayment.
On the contrary, a complex legal battle may take place at the ‘pleading’ stage, as when the other party challenges the method of calculating the price or argues that the goods are defective.
Drafting legal documents, conducting litigation, applying for preservative measures, and carrying out compulsory execution are also fairly difficult for an ordinary person to handle alone.
In this process, you may waste time and money or even face the dismissal of the claim itself.
If you receive the assistance of an attorney who focuses on civil matters, strategic legal responses are possible from the initial response stage, and prompt and accurate recovery of the claim becomes possible.
In particular, when the other party's objections or a courtroom dispute are anticipated, consulting with a professional is necessary.
At our firm, attorneys who have handled many cases involving lawsuits for the price of goods review the contract and assist with proving and calculating the claimed amount.
We also collaborate with examination of evidence professionals as needed to gather evidence related to the litigation and respond accordingly.
