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Dear Sir:

Despite the fact that we have sent you numerous notices and letters regarding your past-due bill of $. . . . . . . . . . for we have heard nothing from you and we are at a loss to understand the situation. We, therefore, feel that we have waited long and patiently and now urgently request your immediate attention.

We assure you that we have no desire to embarrass or trouble you, but it is necessary that this account be settled at once, and we trust that you will make satisfactory arrangements so that the matter may be adjusted without delay.

Very truly yours,

Dear Sir:

Although the matter has been brought to your attention on several occasions you have neither sent us your check in settlement of your long past-due bill amounting to $..... ... for the month of ..... nor given any reasons for delaying payment. This compels us to consider a step that we very much dislike to take, to place your account in the hands of our attorneys for such action as they find necessary.

While we dislike very much having to write you in this manner and to think that anyone who is a customer of ours would compel us to consider such drastic measures, you must appreciate that we have been very considerate and patient and that there is nothing else left for us to do.

We, therefore, feel constrained to state that unless a remittance of the full amount is received by return mail, we shall give your account to our attorneys. Respectfully yours,

Where permitted by law, retailers who are members of some merchants' association are furnished with one or two form letters which are supposed to have been sent by the bureau which the association maintains and which read as though coming from the bureau. These letters have been found very effective. They read somewhat as follows:

Dear Mr. ...

In preparing the files of this bureau, organized for the mutual interchange of credit information, we find that (name of store) reports an account against you which is past due.

We would suggest that you make settlement with your creditor at once so that your record may be clear in our files.

Members of the bureau will, under our rules, report to us within five days as to whether or not settlement has been made.

Very truly yours,

Dear Mr.

We wrote you under date of

stating that (name of store) had

reported an account against you which is past due.

Our letter showed clearly that it was sent in order to give you an opportunity to make settlement with your creditor in order to avoid an unfavorable credit report with us.

Operated, as our bureau is, by the leading retail merchants of

our aim is to conduct negotiations with you in confidence and with utmost fairness. It is our business to give accurate and truthful information as to the paying habit of customers when inquiry is received from members of the bureau, and we feel sure you will appreciate the value of a good credit standing with these merchants.

We shall expect you to make settlement with your creditors at once. Under the rules of our bureau, unless this is done within five days, the matter will be turned over to our attorneys for whatever action they deem necessary. Very truly yours,

Collecting Interest on Past-due Accounts.-This is one of the more difficult and delicate problems that arise in the collection of past-due accounts, involving a question of business policy. From the standpoint of justice and equity it would seem imperative that interest be charged on all overdue accounts. At time of sale, definite terms are agreed upon by both parties, on the basis of which the seller arrives at the selling price of his product. Thus, the money belongs to the seller from the date on which the terms of sale expire. If the debtor fails to pay the bill at maturity, and refuses at the same time to pay interest for the use of the money, he unjustly appropriates property belonging to the creditor, which he could not do under any other circumstances without rendering himself liable to punishment. In this manner, the debtor commits two wrongs: one by using the creditor's property without the latter's consent; the other, by refusing to compensate him in a manner similar to what would be required of him were he to borrow the funds elsewhere.

Failure to charge interest on overdue accounts not only results in unfairness to the creditor himself, but it also involves unfair discrimination against customers who pay their bills promptly. In order to pay their bills at maturity, prompt-pay customers borrow at the banks and pay interest on the funds thus obtained; whereas the slow-pay debtors, by paying nothing for the funds which they employ and by obtaining the same prices from the seller, secure an undue advantage, inasmuch as the terms of sale to them are actually extended by

the period of slowness. This naturally places a premium upon delinquency, which may well be taken advantage of even by customers who could and would otherwise pay their obligations with great promptness, the corollary of which is that insistence. upon the payment of interest. on overdue accounts necessarily results in improved collections.

In order to collect interest on all overdue accounts, several methods may be employed. Words to the effect that interest is charged on overdue accounts may be printed on all statements, and actually added to the amount owed. Another way is to attach a printed sticker to all past-due statements, and either add the interest to the amount of the bill or send a separate bill for it. The total amount owed, including the interest item, should thereafter be given in all communications in which attempts are made to collect the account.

SELECTED REFERENCES

CASSELL, R. J.: "Constructive Collecting," chaps. 25 and 26.

GARDNER, E. H.: "Effective Business Letters," chaps. 10, 11, 12, and 13. HALL, S. R.: "The Handbook of Business Correspondence," chaps. 9 and 10. HOTCHKISS, G. B., and KILDUFF, E. J.: “Advanced Business Correspondence," chaps. 4, 5, and 6.

CHAPTER XXIII

GENERAL RIGHTS AND REMEDIES OF CREDITORS

Under certain circumstances and conditions, unpaid sellers of merchandise may exercise special rights against the goods and resort to certain remedies, even though title to the goods has passed to the purchaser. A seller of merchandise is deemed unpaid, if the whole of the purchase price has not been paid or tendered to him; when a negotiable instrument has been given as a conditional payment in the form of a check, draft, or note, and it has been dishonored; or when the buyer becomes insolvent before the bill is paid.

UNPAID SELLER'S LIEN

Nature of Lien.-A lien constitutes a right of one party to retain in his possession goods belonging to another party until the demands of the holder of the lien have been satisfied. In the case of an unpaid seller's lien, it is implied that the buyer, to whom title to the goods has passed, retains ownership of the merchandise but that the seller or holder of the lien possesses a claim or right, not to ownership, but to hold the goods as security until the obligations of the purchaser have been discharged in accordance with the agreement governing the transaction. Whether or not title to the goods has actually passed depends upon the intention of the parties to the transaction, according to the Uniform Sales Act, which also sets forth certain rules to be observed in determining intent, when it is otherwise difficult to prove.

When Right May Be Exercised.-According to Sections 54 to 56 of the Uniform Sales Act, the right to a seller's lien may be exercised under two distinct circumstances. Where merchandise is sold on a strictly cash basis, i.e., without any agreement involving the extension of credit to the purchaser, the seller may retain possession of the goods until they are paid for, even though the title to the goods passes immediately. The other

possibility for the exercise of a lien is when goods are sold on credit.

In this case the seller may exercise his right of lien when the term of credit has expired before delivery of the goods, or when the buyer becomes insolvent while the goods are still in possession of the seller. This is obviously based on the theory that in extending credit the seller waived his right of lien on the implied condition that the buyer's financial and credit responsibility would remain unimpaired. Upon breach of this implied condition, the seller has the privilege of exercising his right of lien. It is also specifically provided that his right of lien may be exercised even though the seller is "in possession of the goods as agent or bailee for the buyer."

Effect of Part Delivery.-Where the unpaid seller has made part delivery of the goods, he may still exercise his right of lien on the remainder, provided such past delivery has not been made under circumstances showing an intent to waive the lien or right of retention.

When Lien Is Lost.-An unpaid seller loses his lien as soon as he parts with the goods, or as soon as the buyer tenders the purchase price. Section 56 of the Uniform Sales Act specifically provides that the unpaid seller of goods loses his lien thereon (1) when he delivers them to a carrier or other bailee for transmission to the buyer, without reserving to himself the title to the goods, or the right to the possession thereof; (2) when the buyer or his agent lawfully obtains possession of the goods; or (3) when the seller waives the lien. In this connection it should be observed that the unpaid seller does not lose his right of lien by reason of a judgment or decree obtained by him for the purchase price of the goods, for there may be little or nothing on which to levy and the judgment would, therefore, prove worthless. Consequently, it would be bad policy to compel the seller to surrender his merchandise in return for a judgment which may prove worthless.

STOPPAGE IN TRANSIT

When Right May Be Exercised. The unpaid seller's lien continues in effect only during the time the goods are in his possession. Notwithstanding the fact that he has voluntarily parted with the actual possession of the merchandise, the seller is nevertheless still in a position to avail himself of his right of

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