Legal Definitions - en recouvrement

En recouvrement is a French legal term that describes a specific type of instruction placed on a financial document, such as a bill of exchange. When a document is endorsed "en recouvrement," it means the person receiving the document (the endorsee) is authorized only to collect the payment specified in it. Crucially, this endorsement does not transfer ownership of the underlying debt or the right to the money itself to the endorsee. The original owner retains all rights to the funds, and the endorsee acts merely as an agent for collection.

Here are some examples to illustrate this concept:

• International Trade Collection:

  Imagine "Global Exports Ltd.," a company based in France, is owed €75,000 by a client in Spain, "Iberian Imports S.A.," for a shipment of goods. Global Exports Ltd. holds a bill of exchange for this amount. To streamline the collection process and handle international banking procedures, Global Exports Ltd. endorses the bill of exchange "en recouvrement" to its French bank, "Banque Internationale."

  Explanation: By endorsing the bill "en recouvrement," Global Exports Ltd. grants Banque Internationale the legal authority to present the bill to Iberian Imports S.A. and collect the €75,000. However, Global Exports Ltd. remains the legal owner of the debt and the funds. Banque Internationale is acting solely as a collection agent; it does not acquire ownership of the money itself, nor can it sell or transfer the bill as if it were its own asset. Once collected, the bank will deposit the funds into Global Exports Ltd.'s account, typically after deducting any agreed-upon collection fees.

• Corporate Debt Management:

  "Software Solutions Inc." has provided a large software license to "Enterprise Innovations Corp." and holds a bill of exchange for $150,000. Enterprise Innovations Corp. has been slow to make payment. Software Solutions Inc. decides to engage a specialized financial recovery firm, "Asset Recovery Services," to manage the collection. Software Solutions Inc. endorses the bill of exchange to Asset Recovery Services with the instruction "en recouvrement."

  Explanation: In this scenario, Software Solutions Inc. is appointing Asset Recovery Services as its agent to pursue the payment from Enterprise Innovations Corp. The "en recouvrement" endorsement explicitly grants Asset Recovery Services the legal standing to demand and receive the payment on behalf of Software Solutions Inc. However, the ownership of the debt and the entitlement to the funds remain with Software Solutions Inc. Asset Recovery Services cannot claim the money for itself or use the bill as its own financial instrument; its role is strictly limited to collecting the funds for its client.