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Caveats: Protecting you and your business against the unexpected

With so many customers and workers currently staying home, some businesses will be facing an increased risk of insolvency.

You may be caught unawares should legal proceedings be raised against you or your business. Putting caveats into place can help bring peace of mind.

What is a caveat?

A caveat is a legal document that is lodged at court on behalf of an individual or a company. When you have a caveat in place, the court must inform your solicitorif someone is seeking an immediate order against you.

A caveat is an early warning system, which flags up when someone is trying to get an interim order against you without you knowing it.

What types of things does a caveat warn you of?

There are a number of things that a caveat will warn you of, the most common being:

  • The appointment of liquidators for the winding-up of your company: this is an order to appoint a liquidator to your company to have it wound up. If you have caveats lodged on your behalf as an individual they will provide prior warning of any applications being made to the court to have you declared bankrupt by way of the appointment of a trustee in sequestration.
  • Interim interdict: this is an order that could prevent you from doing something e.g. selling a piece of property, entering a certain place, publishing certain information etc.
  • Implement or Delivery: this is an order that could force you to do something, e.g. carry out a specific part of a contract you have signed.
  • Payment on the Dependence of an Action: if you are a debtor, this is an order by which someone can make you pay the debt at the outset of any court proceedings, on the basis that they think you are disposing of or hiding assets

Why do I need a caveat?

If you do not have a caveat in place, the first time you might know about any action may be when it is served on you, advising you that the interim order has already been granted in your absence.

While you would thereafter have an automatic hearing where you could ask the court to remove the interim order, such a hearing is usually appointed to take place two weeks after granting of the interim order. You would, therefore, be bound by the interim order for at least two weeks.

Considering some of the effects of the above interim orders, this could prove to be extremely damaging to you or your business.

If you think you or your business are going to be subject to any sort of litigation, then it is strongly advised that you make sure that you have caveats in place. Even if litigation is unlikely, any business with a link to Scotland should consider putting caveats in place to protect themselves from an interim order being passed without their knowledge.

How long does a caveat last for?

Once a caveat is lodged, it lasts for one year. It can be renewed thereafter on a yearly basis.

How do I get a caveat? Contact our Dispute Resolution team today

If you are interested in putting caveats in place or would like some more information, phone us on 0131 226 8200 and ask to speak to a member of our Dispute Resolution team, or email us DisputeResolution@mbmcommercial.co.uk.

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