Credit Line Agreement

In accordance with Article 111.2 of the Code of Civil Procedure, enforceable documents are those that open the way for payment proceedings (Collections Court): (i) The testimony (authentic copy of the public deed issued by the Notary) that cannot be registered, (ii) The certification of a public deed registered at the National Registry, (iii) A private document recognized by the Courts, (iv) The judicial confession, (v) The certification of final judicial decisions, (vi) The unregistered pledge and mortgage, and (vii) Depending on the line of business, any document that by virtue of its enforceability has the character of an enforceable title.

Considering the above, the Credit Line Agreement or a Current Account Agreement is necessary. Invoices may or may not be executive documents. According to the Commercial Code, in order to be enforceable documents they must be accepted by the debtor and to prove acceptance, the only way is the signature of the debtor himself or his legal representative. With the entry of the electronic invoice, this became more complicated since before physical invoices were sent and signed as received, but now the acceptance is electronic and only for tax purposes, which does not imply an acceptance that gives the invoice an enforceable title.

In order for the invoice to have the character of an executive title, a physical copy must be sent to the client and the client's legal representative must return it signed, or it must be returned signed with a digital signature or digital seal, or a register of signatures must be made where the legal representative sends a list of the persons authorized to sign and receive invoices and those persons must be the ones to receive the physical copy. In view of the complications that the above implies, it is through the credit contract, guaranteed in addition with a promissory note, that it is possible to have access to the monitorio route to make the judicial collection.

Usually, the agreements establish the amount of the line of credit and the way in which the parties should proceed is guaranteed by the promissory note. The promissory note must be renewed from time to time against renewal of the credit line contract and in case of default, the promissory note is executed accompanied by a certified public accountant (CPA) certification stating what is due.

In these cases it is usual to request that the legal representative or the majority shareholders jointly guarantee the credit, so that if the debtor's assets are not sufficient to pay the debt, the legal representative and the shareholders are liable for the outstanding balance.

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