Commercial claims: small claims court for New York businesses

NYC CIVIL COURT ACT ART. 18-A · UCCA ART. 18-A · UDCA ART. 18-A · UJCA ART. 18-A

Who must use commercial claims.

If the claimant is a corporation, a limited liability company, a partnership, or an association, and it has its principal office in New York State, it files in the commercial claims part rather than the small claims part. The rule applies regardless of size: a two-member LLC that designs websites is a commercial claimant just as much as a regional distributor. Sole proprietors are different; because the individual and the business are legally the same person, a sole proprietor generally files in the small claims part in their own name, with the trade name noted.

The reason the Legislature separated the two is volume. Small claims was designed for individuals with a dispute or two in a lifetime, not for businesses with a collections pipeline. The commercial claims rules keep the forum useful for businesses while preventing it from becoming a collections mill.

Defendants can be anyone: an individual customer, another business, a landlord, a vendor. The defendant must live, work, or have a place of business within the court's territory, same as small claims.

The dollar caps are the same.

Each court's commercial claims part carries the same cap as its small claims part: $10,000 in New York City Civil Court, $5,000 in city courts and in the Nassau and Suffolk district courts, and $3,000 in town and village justice courts. The caps are exclusive of interest and costs. A business owed more than the cap can waive the excess or bring a regular civil action; it cannot split one invoice into two claims. The full breakdown, including the waiver trade-off, is in small claims limits in NY.

Where the business sues is determined by the defendant. A Manhattan design firm owed $9,000 by a client in Great Neck files in Nassau district court with a $5,000 cap, not in Manhattan with a $10,000 cap. That single fact drives a lot of decisions about whether to send a demand letter for the full amount first.

The monthly filing cap.

A commercial claimant may file no more than five commercial claims per calendar month in any one court. The cap is per claimant, statewide in effect because it is applied by each court, and the clerk will ask you to certify that you have not exceeded it. For most small businesses five a month is more than enough; for a business with dozens of delinquent accounts it forces prioritization, and it is one reason attorney demand letters get used as the first pass across a receivables list, with court reserved for the accounts that do not respond.

The certification is made under penalty, so keep a log of your filings by month and by court. A claim filed in excess of the cap can be dismissed.

The mandatory demand letter for consumer transactions.

This is the rule that surprises business owners. When a commercial claim arises out of a consumer transaction, meaning the defendant is an individual who bought goods or services primarily for personal, family, or household purposes, the business must send a written demand for payment before filing. Stated in words, the rule is:

• The demand must be mailed to the consumer by ordinary first-class mail.
• It must be sent no less than ten days and no more than one hundred eighty days before the claim is filed.
• It must state the amount owed, the basis for the claim, and that the business intends to bring a commercial claim if payment is not made.
• When filing, the business must certify to the clerk that the demand was sent and when, and supply a copy.

A commercial claim against a consumer filed without the prior demand is subject to dismissal, and the clerk in many courts will not accept it without the certification. Business-to-business claims, for example an unpaid invoice from one company to another, do not carry this requirement, but the demand letter is still the right first step for the practical reasons below.

The statute requires a demand, not an attorney demand. A letter from the owner satisfies the rule. The difference is in the response rate, not the legal sufficiency; a letter on law firm letterhead that recites the statute, the interest, the court, and the consequences of an unpaid judgment gets paid far more often than a third reminder on company stationery. Either way, keep a copy and proof of mailing, because you will need to certify the date.

Fees, forms, and the hearing.

The commercial claims fee is modest, somewhat higher than small claims, in the range of twenty-five dollars plus the cost of the clerk's mailing in most courts. The claim form asks for the business's legal name and address, the defendant's legal name and address, the amount, and a short statement of the claim. An officer, member, partner, or employee may sign and may appear at the hearing on the business's behalf; a lawyer is permitted but not required.

Service is by the clerk, by certified and first-class mail. Hearings are in the same evening sessions as small claims, and in New York City the same arbitrator option is offered: an immediate hearing before a volunteer attorney-arbitrator with a final, non-appealable decision, or a hearing before the judge. Rules of evidence are relaxed. Bring the signed contract or purchase order, the invoices, the delivery or completion proof, the account statement showing payments and balance, every email about the debt, and the demand letter with proof of mailing.

Consider who attends. The person who dealt with the customer is a better witness than the bookkeeper. If a dispute about quality is likely, bring the person who did the work.

Collecting a commercial claims judgment.

A commercial claims judgment is enforced like any other money judgment: information subpoena, restraining notice, income execution, and marshal or sheriff levy, all described in how to collect a small claims judgment. Interest accrues at nine percent a year on most commercial debts. Judgments last twenty years, and a transcript docketed with the county clerk becomes a lien on the debtor's real property.

Note the asymmetry in the Civil Court Act: the special consequences for unpaid judgments, including treble damages and licensing-agency reports, apply to business judgment debtors. If your business is the one owed money by another business, those tools are available to you. If your business is the judgment debtor, they apply against you.

What a demand letter does here.

For a business, the demand letter is doing three jobs at once. First, for consumer debts it is a legal prerequisite; no letter, no claim. Second, it is the triage tool for the monthly filing cap: send letters across the delinquent accounts, and file on the five that did not respond. Third, it converts a receivable into a documented, interest-bearing, court-ready claim, and that alone gets many accounts paid. A customer who has ignored three invoices reads a letter stating that interest is running at nine percent, that the claim will be filed in a named court, and that the resulting judgment will be enforced by a marshal, and pays.

Our unpaid invoice demand letter is built for exactly this, and satisfies the consumer-transaction demand requirement when the defendant is an individual. If the debtor wants to pay over time, a payment plan agreement converts the promise into an enforceable document. If the debtor is a freelancer's client and the business is the freelancer's single-member entity, the Freelance Isn't Free Act may add double damages and attorney's fees. The process is on our flat-fee demand letters page.

When a letter is not the right tool for a business: the debtor is insolvent or dissolved (check the Department of State database before spending anything), the account is so old that the six-year limitations period is about to run and you need to file this week, or the amount is under a few hundred dollars and simply writing it off is cheaper than either a letter or an evening in court. For larger B2B receivables where the amount exceeds every cap, a demand letter followed by a regular civil action, rather than commercial claims, is the usual path; see demand letter vs. small claims.