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Debt claim defence • disputed invoices • set-off • counterclaims

Defending a Business Debt Claim

A demand for payment is not the same as proof that the debt is due. Businesses facing a letter before action or County Court claim should identify the contractual basis, test the claimant's evidence, quantify any set-off or counterclaim and protect procedural deadlines before responding.

KEY ANSWER

The position in brief

If your business is being pursued for an alleged debt, the first task is to identify exactly what is said to be owed and why. Check the contract, invoices, delivery or performance evidence, variations, complaints, credits and payments. A genuine defence may arise from non-performance, defects, lack of authority, set-off, counterclaim, limitation or the claimant suing the wrong legal entity.

If proceedings have already been served, response deadlines matter. Ignoring a claim can lead to default judgment even where the underlying debt is disputed.

Legal issues

Typical issues include formation and incorporation of terms, the identity of the contracting parties, performance, acceptance, defects, variations, termination, set-off, counterclaims, limitation, contractual interest and pre-action conduct.

A defence should plead the material facts relied on rather than simply state that the invoice is disputed. Any counterclaim should be identified and quantified as far as reasonably possible.

Evidence that matters

Preserve the contract, terms, quotations, purchase orders, project files, delivery records, complaints, remedial work, emails, messages, account statements, payment records and any documents supporting loss caused by the claimant.

Reasonable lines of enquiry

Map each part of the claim to the evidence supporting or contradicting it. Identify witnesses, technical evidence and any contractual notice or dispute-resolution requirements. Check whether the claimant has sued the correct legal entity.

What happens next

At pre-action stage, the business can provide a reasoned response, exchange documents and explore settlement or ADR. If a claim has been issued, the defendant must comply with the applicable acknowledgment and defence timetable. The case may then proceed through allocation, disclosure, witness evidence, ADR and trial if unresolved.

Immediate steps

Do not ignore a solicitor's letter or sealed claim. Record the response deadline, preserve the transaction file and stop informal staff replies from creating avoidable admissions before the position has been reviewed.

What should you send us?

Send the letter before action or claim form, particulars, contract, invoices, payment history, complaints, project records and documents supporting any set-off or counterclaim.

Legal information from Theodorous. The law and procedure can change and the application of the law depends on the facts. This guide is general information, not advice on your individual case.

HOW WE CAN HELP

What Theodorous can do

We can assess the claim, draft the pre-action response or defence, advise on set-off and counterclaims, negotiate settlement and conduct defended proceedings.

NEXT STEP

Defend the debt claim before deadlines expire

Send the demand or court papers and the underlying contract documents. We can identify the defence, counterclaim and immediate procedural steps.

Defend the debt claim before deadlines expire

FREQUENTLY ASKED QUESTIONS

Questions about this issue

What happens if I ignore a business debt claim?

If court proceedings are ignored, the claimant may be able to obtain judgment in default. A disputed debt should therefore be answered within the applicable deadline.

Can my business set off its own losses against the amount claimed?

Potentially. The legal basis and amount of any set-off or counterclaim must be analysed under the contract and applicable law.

Can a creditor use a statutory demand if the debt is genuinely disputed?

Insolvency procedure is not intended to decide an ordinary substantial contractual dispute. A genuinely disputed debt can make statutory-demand or winding-up pressure inappropriate.