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The Late Payment of Commercial Debts (Interest) Act 1998 (the Act) provides certain parties statutory rights to charge interest and compensation on late payment of commercial debts.

This Act comes into play more often than parties may realise, below we have addressed some of the Frequently Asked Questions in relation to the Act.

FAQs

Yes, subject to the following requirements being met:

  • The debt applies to a business-to-business contract; and
  • The contract relates to the sale of goods and/or provision of services
  • The contract does not fall within exempted category of contracts contained in the Act; and
  • The contract was made on or after 7 August 2002
  • The reader should note that if there are international elements to the contract, then there may be further considerations to be taken into account

If the contract does not expressly specify the interest rate which applies to outstanding invoices, then you may be entitled to charge interest at 8% over the Bank of England Base Rate per annum.

The amount of compensation which can currently be claimed is determined on the value of the debt outstanding. At the time of writing, these sums are as follows:

Amount of debt Claimable amount
Up to £999.99 £40
£1000-£9999.99 £70
£10000 and more £100

If the contract specifies a payment date, then interest will start to accrue from the day after the specified payment date.

If no payment date is specified under the contract, interest will accrue 30 days from:

  • The date of supply; or
  • The date of notifying the buyer of the due amount / providing the invoice to the buyer; or
  • The procedure of checking whether the goods and/or services correspond with the contract is complete.

You may have a statutory right to claim back reasonable costs incurred for the purposes of recovering the debt, including solicitor’s fees.

The first thing you should do is check the agreement you have, and cross reference it with the Act. It may be that there are provisions within the contract which preclude you from relying on the Act, and therefore you should be cautious before simply demanding additional sums from any debtor.

Bishop & Sewell understand the importance and time-sensitivity of recovering debts owed to a business. An inability to collect an invoice could lead to your own creditors not being paid, a requirement to seek cash from other places, or compromise your ability to generally operate your business.

Whether you are looking to recover money, goods, compel a party to comply with a contractual obligation, defend against allegations of breach of contract, or are seeking to extract yourself from a contract you now cannot comply with, Bishop & Sewell have a team of lawyers able to advise you on the options which are available to you.

Contact our Solicitors

Whether you are looking to recover money, goods, compel a party to comply with a contractual obligation, defend against allegations of breach of contract, or are seeking to extract yourself from a contract you now cannot comply with, Bishop & Sewell have a team of lawyers able to advise you on the options which are available to you.

Late Payment of Commercial Debts Solicitors

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