Late payment, reason to terminate contract?

[TheFaQQer]

A single late payment is no way a breach and would never stand up in court

Wrong. If there is a contract clause detailing when the payment will be made, and that payment is not made in accordance with the clause, then it's a breach of contract.

Under UK contract law, you would be entitled to damages for the late payment.

EE's phone network went down this week. Is that a breach so everyone can cancel their contracts without penalty? Is it chuff.

No, but it's a nice straw man. If the contract has a clause in it which guarantees 100% uptime, and the network fails to provide that, then there is a breach of contract. However, it would not allow you to terminate the contract.

[riffpie]

Under UK contract law, you would be entitled to damages for the late payment.

Providing there were actual, demonstrable losses incurred as a result of the late payment.

[TheFaQQer]

Providing there were actual, demonstrable losses incurred as a result of the late payment.

Which is easy to prove, assuming you have a bank account which bears interest. Of course, for late payment, you are also protected by statute.

[riffpie]

Which is easy to prove, assuming you have a bank account which bears interest. Of course, for late payment, you are also protected by statute.

True.

Assuming £450/day, and a three day working week, that's £1,620 inc. VAT OP is owed. Let's assume an AER of 1.35%. That sum owed would earn £21.87 in a year. If the agency are a month late with it, that's a whole £1.82 he can claim.

Oversimplified, but that's the gist of it.

[northernladuk]

Wrong. If there is a contract clause detailing when the payment will be made, and that payment is not made in accordance with the clause, then it's a breach of contract.

Under UK contract law, you would be entitled to damages for the late payment.


No, but it's a nice straw man. If the contract has a clause in it which guarantees 100% uptime, and the network fails to provide that, then there is a breach of contract. However, it would not allow you to terminate the contract.

Indeed but termination is what the OP is after which I can't see will work.

If You Want To Terminate?

But what if you want to terminate the contract?

Says Royden: ''It is possible to treat late payment as a breach of contract, but it must be of the essence of the contract. That means, for you, getting paid on time is absolutely essential, critical to the work you agreed to undertake when you signed the contract.''

Some contracts have terms that make this clear in themselves. ''But if you need to prove that it is essential that you be paid on time, write a letter to the company and remind them that this is essential to the contract, and that you will consider it a breach of contract if they continue to pay late,'' Royden continues.

If the company still pays you late, you have the right to terminate without further delay, and you can seek to recover damages. If the amount is large, you should probably take professional advice at this point.

[northernladuk]

True.

Assuming £450/day, and a three day working week, that's £1,620 inc. VAT OP is owed. Let's assume an AER of 1.35%. That sum owed would earn £21.87 in a year. If the agency are a month late with it, that's a whole £1.82 he can claim.

Oversimplified, but that's the gist of it.

You have to wait 30 days before this can start though...

You have to show that you are a small business (with fewer than 50 workers), and that the debt is due for more than 30 days--if your contract states that payment of your invoice is due after 7 days, then you must of course wait 37 days before claiming that it is overdue.

Satisfy these conditions, and you're entitled to interest at 8% over the 'official dealing rate' (find this on the Bank of England website). If that rate is currently 5.%, the interest rate you are entitled to is 13.%. You can calculate the interest due using the Late Payment Calculator on this site.

[TheFaQQer]

True.

Assuming £450/day, and a three day working week, that's £1,620 inc. VAT OP is owed. Let's assume an AER of 1.35%. That sum owed would earn £21.87 in a year. If the agency are a month late with it, that's a whole £1.82 he can claim.

Oversimplified, but that's the gist of it.

Or £79.75 since that's the statutory amount.

[TheFaQQer]

Indeed but termination is what the OP is after which I can't see will work. Interesting article here..

As I said in post 7 - it's a breach of warranty, so the OP would be entitled to damages but not termination.

To say that when someone breaks a clause in the contract isn't a breach is wrong, though.

[riffpie]

Or £79.75 since that's the statutory amount.

It is? Source? Don't not believe you, just never heard of that before.

[northernladuk]

As I said in post 7 - it's a breach of warranty, so the OP would be entitled to damages but not termination.

To say that when someone breaks a clause in the contract isn't a breach is wrong, though.

Yep. I was coming from breach & termination just for a single late payment but yes you are quite correct.