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Document preservation is a must

Paper trail.

Today, with the use of electronic transmission and storage of communications, records and documents combined with a growing emphasis on a green/paperless environment, businesses must not lose sight of or sacrifice retention.

Some types of written communication, records and documents are easier to retain electronically than others. However, some businesses are not preserving the type and volume previously retained.

Businesses must consider balancing the electronic and environmental emphasis with the prospects of needing the communications, records or documents at some future time, or to provide proof of evidence of a relationship, transaction or occurrence.

The examples are many. There is no higher or better proof or evidence than an ink-signed original of a document. Whether it is a credit application or, more importantly, a personal guaranty, a signed shipping or delivery receipt, purchase order, order confirmation or specifications confirmation, the situation routinely arises when proving the point could be important to your claim, defense or collection of a monetary amount due or owed.

Customers from the most savvy to the less sophisticated are becoming aware of this, and especially in today’s troubled economic times, rely on the creditor’s inability to provide this documentation and thus be unable to prove their claim of money owed.

Despite the fact you may never have received a negative query from your customer, when push comes to shove, such an excuse or defense can and will arise. The fact that months have passed and time expired without any such negative query, complaint or issue from the customer will not necessarily preclude or diminish the later arising excuse or defense.

This is true whether the issue with your customer is at the stage where your attorney is handling it or the situation is at the point of mediation, arbitration or court litigation. Your position that your claim for a monetary debt is based on an account-stated situation is not necessarily failsafe and protected from a variety of excuses and defenses.

Go on the offensive

For example, a customer, faced with a difficult financial situation, conjures up an excuse or defense that it did not receive an order shipped and invoiced or did not receive conformed goods or ordered quantities. Sometime down the road later on during this adversity, the customer claims he or she withdrew a personal guaranty or that the signature is a forgery.

There are instances where the busy or casual supply house/distributor, through its own truck or over the counter, will deliver without requiring a signature, will deliver on verbal OK to an unattended jobsite or drop point, or simply take the signature of any worker that can be found at the site, which may include a laborer for a different subcontractor.

An often-used excuse is either the signature is illegible or it is that of an unauthorized or ex-employee. In some cases, the truck driver simply is concerned with quickly finishing his/her delivery route rather than exercising caution in delivering the goods to the proper authorized recipient. To overcome this excuse or defense and sufficiently prove your case according to the measures of the law, you will need to produce a legible signed receipt. And to maximize your position, the delivery driver will need to identify the receipt.

You also may have a manifest or email from your customer with delivery instructions. While having the documents is great, failing to preserve them could be fatal to your position. At the very least, upon delivery to an unattended location, the truck driver should take an extra minute to take a full-view photo (easily accomplished with today’s smartphones) once the goods are unloaded. This preemptive measure is simple and economical as to time and expense. This can be emailed to your computer and stored. As the saying goes, “A picture is worth a thousand words.”

With documents that are electronically transmitted to you by the customer, you should be sure upon your receipt that the full page is clear, signature handwriting is legible, any headers at the borders or margins of the page are fully visible and any transaction receipts are retained. These measures will maximize your opportunity to prove your point and prevail.

Some businesses in the current age do not require or retain these documents and some do scan and preserve, but only for a short time period after which the computer system automatically purges the documents without consideration of any account-specific concerns.

If signed delivery receipts or tickets are scanned and preserved, but automatically purged after six months and 12 months later (subsequent to attorney involvement with or without a lawsuit), upon review of a statement of account or invoices, the excuse of non-receipt/non-delivery magically arises, the business has lost its best and highest form or proof.

Your customer, regardless of level of sophistication, can force this issue and without a written basis, you have an uphill battle in a he-said/she-said dialogue. By the measure of the law, you will have the burden of proof.

The preemptive measures are many, and the tips and hints are many, but the two primary messages here are that many preventive methods are worthwhile and document retention is necessary.

This article and information contained herein is for general informational purposes only and is not to be construed as rendering a legal opinion or advice. The facts of each situation as well as state laws are varying and different. Thus, prior to any action being taken, consultation with an attorney is recommended. This article is not a substitute for consultation with any attorney prior to proceeding with any matter.

Author bio: Arthur S. Vener, Esq., is a practicing attorney with expertise in creditors’ rights collection practice and has represented wholesale supply houses for more than 30 years. He can be contacted at asvesq@aol.com or 845/359-3560 and 404/881-1800.