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Debt collection case Ukraine

Equipment delivery was agreed between company A. from China and company D. from Ukraine. However, no formal contract was made, only verbal agreement.

Owner of Ukrainian company made private payment of 20% of agreed products value.

Products were delivered in Odessa by sea with FOB terms, however consignee was not company D. but transport company E.

That is where problems started. Parties started to argue about price when products were already delivered to transport company warehouse in Ukraine. Ukrainian company D. thought they agreed some discount, but Chinese company A. stated that was misunderstanding.

As result, final payment was not made and products were not released by transport company E. to company D. and remained at the warehouse.

Almost three years passed when creditor from China finally decided to try debt collection in Ukraine.

However all efforts to collect debt in Ukraine finalized with the complete stall since:

  • Creditor company A. from China wanted to get debt paid.

  • Debtor company D. from Ukraine did not want to pay debt since they did not want those outdated products anymore; instead they liked to get prepament back.

  • Transport company E. wanted either creditor or debtor to compensate storage fees for almost 3 years and paid VAT.

Despite of amicable debt collection In Ukraine was not successful and case went legal, it gives good lesson to everybody:

  • Always fix all agreements in writing. Even the simplest contract in electronic form is better than just verbal agreement. Sadly, there is no such thing as “gentlemen agreement” in the modern business anymore.

  • Involve debt collection experts in time. 6 -12 months is fair time to try collect debt yourself. After that just send it for debt collection experts.