CONTENTS
- 1. Receivables Recovery, the Client Who Requested Assistance
- - The Story of the Client Who Decided to File a Receivables Recovery Suit
- 2. Construction Payment Litigation to Recover Receivables
- 3. A Debt Collection Attorney's Assistance to Recover Receivables
- - Receivables Recovery Strategy 1. Arguing Conclusion of the Construction Contract and Completion of Performance
- - Receivables Recovery Strategy 2. Rebutting the Claim of Breach of the Duty to Disclose Under the Principle of Good Faith
- 4. Receivables Recovery Litigation Outcome, "Full Recovery"
1. Receivables Recovery, the Client Who Requested Assistance
This is a case in which a client who requested help with the recovery of outstanding receivables, with the assistance of a debt collection specialist attorney, proceeded with a construction payment lawsuit and succeeded in recovering the full amount of the outstanding receivables.
The Story of the Client Who Decided to File a Receivables Recovery Suit
This is the account of a client who requested help with recovering an outstanding receivable.
The client is a company specializing in the manufacture and installation of equipment, and the client performed work after being subcontracted by the defendant for part of the process equipment construction at an industrial facility.
The defendant subcontracted two separate equipment works to the client on two occasions, and the parties contracted by clearly setting the contract amount and scope of work for each project.
The client completed all of the work within the set period and received part of the corresponding payment.
However, part of the remaining construction payment for the first project was not paid, so the client issued a tax invoice for the unpaid amount and sent it to the defendant.
However, the defendant received it without any particular objection and yet ultimately did not pay the remaining amount.
Accordingly, the client decided to file a legal lawsuit to recover the outstanding receivable and requested help from a debt collection attorney with experience in numerous construction payment cases.
2. Construction Payment Litigation to Recover Receivables
▶What Is a Construction Payment Lawsuit?
A construction payment lawsuit is a legal proceeding filed when, after construction has been completed under a construction contract, the ordering party fails to pay the agreed amount within the stipulated period or breaches the terms of the contract.
Such a lawsuit is an important means of upholding the good faith and principles of the contract and ensuring that fair compensation is paid.
Where the contracting counterparty fails to pay all or part of the agreed amount despite the completion of construction, the contractor may recover the outstanding amount through legal proceedings.
▶Why Do Problems of Non-Payment of Construction Fees Arise So Often?
In the case of construction or facility work, the contract structure is often complex, and the stages frequently multiply through contracting, subcontracting, and re-subcontracting.
In this process, problems of outstanding payments frequently arise for the following reasons.
-Unclear contractual relationships due to failure to prepare a contract or reliance on oral agreements
-Deterioration of the ordering party’s financial situation or intentional avoidance of payment
-Withholding of construction payments on grounds such as design changes or delays in the construction period
▶Can Outstanding Construction Payments Be Recovered Through Litigation?
If the fact that construction was completed and the agreement on payment are proven, a civil lawsuit may be filed with the court to obtain a judgment ordering payment of the construction fees.
In particular, the following materials work favorably in litigation.
-Photographs, supervision confirmation documents, and the like that can prove completion of construction
-Records of tax invoice issuance and account transaction details
-Text messages, emails, certified mail, and the like requesting payment even after completion of construction
3. A Debt Collection Attorney's Assistance to Recover Receivables
We set about proceeding with a construction payment lawsuit to recover receivables.
At Daeryun LLC, specialized attorneys with extensive experience in construction payment matters formed a task force dedicated solely to the client and set about proceeding with the lawsuit to recover the receivables.
Receivables Recovery Strategy 1. Arguing Conclusion of the Construction Contract and Completion of Performance
The debt collection attorney first argued that the construction contract in this case had been clearly concluded and that the client had performed in accordance with the terms of the contract.
The defendant contracted out the first construction and the second construction in this case to the client in the amounts of 600 million won and 500 million won, respectively.
The contents of this contract, namely the fact that the contract was concluded, are objectively and clearly confirmed through the estimate, the purchase order, the construction breakdown, the settlement materials in line with the progress of construction, and the tax invoice issued after the completion of construction.
The client completed all of the construction within the scope set in the contract within the set construction period, and the defendant acknowledged the fact of completion and paid part of the amount due.
In addition, the fact that the defendant received the tax invoice issued by the client for the unpaid amount means that the defendant was also aware of the existence of the debt.
Accordingly, the debt collection attorney argued that the client had faithfully performed all obligations under the contract and that the current claim for the remaining outstanding amount was justified.
Receivables Recovery Strategy 2. Rebutting the Claim of Breach of the Duty to Disclose Under the Principle of Good Faith
The defendant argues, in effect, that the client violated a duty of disclosure under the principle of good faith in the course of this contract, and seeks to evade the obligation to pay the price.
The debt collection specialist attorney emphasized that the defendant's argument was without merit and could not be recognized in law, for the following reasons.
▶The existence of a specific duty of disclosure and the fact of its violation are themselves not recognized
-The defendant argues that the client bore a duty of disclosure regarding the contents of the contract or external circumstances and violated it
→ The client faithfully performed the scope of work under the contract with the defendant, and there were no changes during the construction process and no special circumstances that would affect the result of the construction
In addition, the defendant received and reviewed all materials issued by the client, including the construction statement, progress reports, tax invoices, and result reports, and raised no particular objection during the construction period
Even where there is a duty to disclose, where the other party already knows the fact subject to the duty of disclosure, or has a duty to ascertain it himself, or where, under trade practice, the other party is expected to know it as a matter of course, the failure to inform the other party of such circumstances cannot be regarded as a violation of the duty of disclosure.
4. Receivables Recovery Litigation Outcome, "Full Recovery"
As a result of the lawsuit to recover the outstanding payment, the court rendered a judgment ordering recovery of the entire outstanding amount.
A situation in which payment is not received despite having completed the construction, like the client in the case above, is a very unjust and distressing matter from the contractor's standpoint.
To recover an outstanding construction payment, one must accurately construct, in legal terms, ▲supporting materials regarding the conclusion and performance of the construction contract, ▲the determination of the contracting parties, and ▲the existence of the payment agreement and the fact of non-payment.
It is also important to be equipped with clear counterarguments against the various claims the other party may raise.
Based on its experience with numerous cases involving construction payment and contract-for-work disputes, Daeryun LLC provides a one-stop service for recovery of outstanding payments, including ▲confirmation of the contractual relationship and the debtor, ▲analysis of the cause of the outstanding payment and legal review, ▲evidence collection, ▲litigation, and ▲compulsory execution and recovery procedures.
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