Receipts

Here is a good habit you can get into today that will solve a lot of potential problems as you go through life, particularly in business and business litigation. Always get a receipt; always give an invoice.

People frequently ask us to file lawsuits for breach of contract or for unpaid debts, or they need us to help defend them in collections suits. The first question we always ask is whether there is anything in writing evidencing the debt. The second question, is whether there is anything in writing evidencing that the debt was paid. The winner in these types of lawsuits is frequently the one with the better records.

So what should an invoice say? An invoice should have the following elements:
(1) How much money is owed;
(2) When is the money due;
(3) What did you do (or will you do) to earn the money;
(4) If the job is done, state that the work was done completely and properly; and
(5) Signatures of both parties with dates

You can also add provisions to the invoice for late fees, interest, and other special terms, but its very easy to hand write the above five requirements on a slip of paper. Try writing “George Washington, mowed Benjamin Franklin’s lawn completely and properly on July 4, 1776. Benjamin Franklin owes George Washington $5.00 by July 5, 1776 for doing the work. Signed… /s/ George and /s/ Ben 7/4/76.” That paper would be a slam dunk in a lawsuit, and can work for you too, unless Ben has a receipt.

What should a receipt say? A receipt should also have five elements, some are similar to the above:
(1) How much money was paid;
(2) When was it paid;
(3) What was the money for;
(4) How much is left to be paid (if nothing, it should say so);
(5) Signatures of both parties with dates.

It is very important, when you give someone cash, to get a receipt. Laws such as the Parole Evidence Rule and contract clauses often called Entirety Clauses make it very difficult to prove money changed hands without something in writing. A receipt can also be easily written on a handwritten sheet of paper: “Ben Franklin paid George Washington $1.00 on 7/5/76; Ben still owes George $4.00 for mowing his lawn.” Or later that day “Ben Franklin paid George Washington $4.00 on 7/5/76 for mowing his lawn. Ben does not owe George any more money for this debt.”

When its one person’s word against the other in court, the one holding written evidence almost always wins. Having an invoice or a receipt means you can be that winner.

If you want to talk about more sophisticated contracts, or how to go about collecting on any invoice in Court, give us a call.