Remedies for Delayed Payment
Specialists in government contract law, the attorneys at Malyszek & Malyszek can help you with remedies to correctly deal with late or non-payment issues.
The government may have no arguable defense for nonpayment, but simply fails to process the contractor’s invoice in a timely fashion. In addition, an agency may refuse payment of a contractor’s invoice on the grounds that the work is defective, that payment is not yet due, or that the costs being sought are unallowable.
Establish a system so that customers are reminded when payments are overdue. If you still do not get paid, make contact on the phone. To achieve this with ease, prepare some standard forms of letter and get them into your system. As well as taking steps to recover the debt, there are other remedies to consider.
The Late Payment of Commercial Debts Act of 1998 allows a business to claim interest on overdue payments at around 8% above base rate. This interest can be claimed on all business to business transactions and some debt recovery costs. Give yourself a margin and lessen the risk of interest actually being claimed; a low rate of interest does not justify the effort for a supplier to make a claim.
However if you are working in the construction industry the law allows you to suspend work for non-payment. Under the Housing Grants, Construction, and Regeneration Act of 1996, if a contractor has not been paid in full by the due date they have the right to interrupt performance of his obligations after giving the client at least seven days’ notice of his intention. The right to suspend performance terminates when the client makes payment in full of the amount due.
Non-payment must be a specific term permitting a supplier to give notice to terminate a contract. If you don’t have any termination clause in your contract then you don’t have an automatic contractual right to end it. No client is likely to complain if you have such a provision in your terms of business.
The Malyszek & Malyszek law firm has been practicing government contract law for more than 40 years. At Malyszek & Malyszek we focus on all aspects of contracting with the U.S. federal government for companies nationwide and overseas. Malyszek & Malyszek can help with your government contract matters and rulings. Call Malyszek & Malyszek today to learn more about our government contract law legal services.
