Keeping a paper trail is of paramount importance. Unfortunately when relationships break down, attitudes change and other issues (typically surrounding money) are often brought to light in an attempt to offset any agreed repayment.
They simply trusted the other party to stand by what had been agreed in person. Clients have explained to me that such loans were never documented and were agreed orally. Other arrangements are more informal and it may not be cost effective to have a formal agreement drawn up.Ī familiar scenario with clients is where significant sums of money have been loaned to an ex-partner or a family member. Often there is an element of trust in the relationship between parties and of course you do not typically enter into any agreement with a view to a dispute arising. However, I do appreciate it is not always perhaps suitable to enter into a formal contract. A dispute may still arise but a clear document that is signed and dated by those concerned will help prevent ambiguity as to the terms agreed later down the line. The most obvious way is to do proper due diligence on the person you are dealing with and to draw up a formal agreement to be signed by the parties. Therefore it is crucial for all parties to consider documenting what has been agreed. However, there are some instances where defendants must evidence their position too, for example if they wish to counterclaim or where they state money was paid as a gift. The onus is typically on a party bringing a claim to prove their case on the balance of probabilities. Evidence is crucial in civil disputes and is something everybody should think about when entering into any form of agreement or understanding with another party.
Recently I have been instructed on a number of cases where clients have encountered one fundamental issue – a lack of documentary evidence.
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