Formal Notice: Definition, Effects, and Implications for Businesses

Are you a self-employed professional, business owner, or company manager facing payment delays or unpaid invoices?

A formal notice (“mise en demeure”) constitutes a formal procedure by which a creditor requests that a debtor fulfill an obligation, whether it concerns the payment of an outstanding invoice or the performance of another contractual duty. This step is essential and often mandatory before initiating legal proceedings. Courts generally require the creditor to demonstrate that an attempt at amicable resolution was made before bringing the matter before a tribunal. In this context, a formal notice also serves as evidence, attesting that the creditor acted in good faith to resolve the dispute, but without success.

Legal Effects of a Formal Notice

Although a formal notice does not compel the debtor to pay, it has important procedural implications:

• Commencement of late payment interest: It marks the starting point for calculating late payment interest and penalties as specified in the general terms and conditions of sale.

  
  

• Preparation for judicial action: It represents a necessary preliminary step before initiating legal proceedings, such as a payment injunction, summary judgment, or a formal legal action for payment.

  
  

Possible Outcomes of a Formal Notice

1. Amicable settlement of the debt: The debtor pays the amount claimed, thereby resolving the dispute.

   
   

2. Referral to the competent courts: If the debtor fails to respond or settle the debt after receiving the formal notice, the creditor may initiate a payment injunction or summon the debtor before the competent court to obtain an enforceable judgment. This allows the creditor to pursue enforcement measures, including seizure of assets, and other forced recovery actions.

#formalnotice #debtcollection #receivables #business #commerciallaw #legal