Rejection of a proposal to clear a debt (+ optional counter-proposal)

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What's a rejection of a proposal to clear a debt (+ optional counter-proposal) and when do you need it?

You should use this letter if your business is owed a debt by another business, if that business has proposed a way to settle the debt, and you intend to reject the proposed arrangement.

The drafting in our template makes clear, in your favour, that the terms of the original agreement still stand and you reject the proposal for payment that you have received. However, the drafting also offers you the option to include wording that either requires the contracted payment immediately, (failing which, you will take the actions that your contractual relationship permits you to take (like charge late payment interest and prepare to instigate legal action)); or to counter-propose a one-off arrangement, which you can outline.

So while you’re rejecting what your debtor has proposed, you can still set out an alternative proposal (a counter-proposal) to which you would be prepared to agree, this time around. That counter-proposal might, for example, set out your agreement to the debt being paid in instalments or larger and faster instalments than the debtor may initially have proposed to you - the arrangements for which you should very clearly define if you choose to take this approach.

If you do include a one-off concession as part of your rejection and counterproposal, the template also makes clear that this is not a legal obligation on you and that just because you may have agreed to a different approach on this one occasion, you are not legally obliged to do so on any subsequent occasion.