Indefinite payment terms in contract

[Guest]

Hi,

I don't think your joining guidance of posting in the welcome forum to get directed to the right section works very well, so I will post my question here now.

I have an IT contracting limited business and work for an end-client via an agency and intermediate client. So:

End-client (work) -> client -> agency -> supplier (me)

I have a contract with the agency and no-one else.

The problem is that the payment terms in the contract says that the agency will pay me five days after the client has paid them. It used to say that the client had to pay the agency within 30 days of the agency invoicing them, but the client didn't really stick to that anyway, and the agency would just shrug and has now taken that bit out of the contract as well.

So I have always been paid completely arbitrarily after invoicing the agency, usually 5-12 weeks later. I have started issuing late payment fee invoices over 30 days as per law, but the agency is refusing to pay them saying they always pay me within five days of the client paying them.

So at the moment:

1) I have no idea when the agency invoices the client
2) I can tell from past correspondence that they normally invoice the client seven days after I invoice them, apparently because they are waiting for confirmation that I have done the work.
3) I have no idea when the client pays the agency
4) I have no idea if the agency really pays me within five days of recieving the money

I'm at my wits end with this agency. They say their legal team says it's perfectly ok not to pay until they have been paid, but as far as I can tell, they can just arrange with the client not to pay me at all that way.

Any thoughts?

Thanks

[Guest]

Hi again,

Thinking about this situation yesterday, I seem to remember there is a contract law saying that a contract must be fair to both parties. Having payment terms where the paying party can delay payment forever surely goes against that.

This is going to end up in court, so I really could do with some guidance.

Thanks

[R0b]

Hello

This sounds like a B2B contract in which case the terms are dictated by the contract terms. If something isn't in the terms - for example issuing late payment fees, then you can't do it.

Also as to your point about the terms having to be fair to both parties is not true. The parties have the freedom to contract with one another, negotiate or not to contract at all. In a B2B setting, the courts are less reluctant to interfere with what has been agreed as to the terms unless it is unfair and there is a test for that.

Since we don't know what the terms of your contract say, I dont know what help you want us to give you. If you are asking for us to say whether you are right or wrong, then we need to see those terms.

However, if the contract said payment after 5 days and you've started accepting 5-12 weeks you may be deemed to have varied the contract so that payment is now 5-12 weeks. I'm just speculating because I don't know what the contract says.

[Guest]

Hi Rob,

Thanks for replying. I don't mind showing you the whole contract, but obviously is has company names etc. in it, so I'm not keen on just posting the whole thing up freely. Let me know if you want to see it in its entirety.

Hello

This sounds like a B2B contract in which case the terms are dictated by the contract terms. If something isn't in the terms - for example issuing late payment fees, then you can't do it.

How does that fit in with this:
https://www.gov.uk/late-commercial-p...-debt-recovery

"Late commercial debt" would be business-to-business?

"You can claim interest and debt recovery costs if another business is late paying for goods or a service."

Also as to your point about the terms having to be fair to both parties is not true. The parties have the freedom to contract with one another, negotiate or not to contract at all. In a B2B setting, the courts are less reluctant to interfere with what has been agreed as to the terms unless it is unfair and there is a test for that.

Ok, there are proobably details I don't know enough about.

Since we don't know what the terms of your contract say, I dont know what help you want us to give you. If you are asking for us to say whether you are right or wrong, then we need to see those terms.

The only thing about payment says:

The payment terms from Client to <agency> is 30 days and <agency> shall pay the Supplier within 5 business days upon
receipt from Client .

But the 30 days from CLient to <agency> has been dropped in a later amendment.

However, if the contract said payment after 5 days and you've started accepting 5-12 weeks you may be deemed to have varied the contract so that payment is now 5-12 weeks. I'm just speculating because I don't know what the contract says.

But it doesn't say 5 days for them to pay my invoice, it says 5 days after an arbitrary event I have no visibility or control over.

And I have *never* started accepting anything. I have complained from day one about their lack of payment, my invoices all say pay within 30 days or I will add late payment fees, and I have issued two late payment fee invoices since April.

I litterally have *no* idea when I will get paid next.

If what you are saying is correct, then they can just not pay my latest invoice ever, and all I can do is walk away and lose the money?

Thanks

[Guest]

Such a shame swarblaw was closed...

Bye.

[R0b]

Good luck