Outstanding Invoices/ Late payment charges

[JTHG]

Hi,

Looking for some help please. I'm not sure what details are relevant so I'll include as many as possible

I was self employed for 5 years selling a manufacturer's made to measure products. They were my sole supplier.

I received an email on the 7th of August after a recent dispute saying the company would no longer supply me with immediate effect due to ' a breakdown of the relationship' . In actual fact I think it was my complaining about their declining standards that was the real reason. As they were my sole supplier and I was unable to find another supplier that could provide the full service I needed my business collapsed that very day.

I had outstanding invoices of £7700. We were negotiating the details of the remaining outstanding orders and I was in regular contact with the managing director, when out of the blue I received a solicitors letter advising me they were charging late payment charges and interest totalling almost £700. I believe legally they are allowed to do this as the payments were over the verbal 30 day terms. I have never received a contract or anything in writing from the company, it was an extremely relaxed arrangement which they abused continually by changing their terms, procedures etc.

Due to investing heavily in my website and SEO work I didn't have the full outstanding balance as I hadn't expected my business to collapse over night. I paid what I had £3800 and have tried to negotiate an arrangement with them. They have refused all my suggestions and have requested that I pay £1500 per month until the balance is paid which is completely unachievable as I have no income at present. They have now said they will issue court proceedings.

My questions are 1) are they legally able to charge late payment fees when they affectively put me out of business causing severe financial hardship? I suspect the answer is yes but do want to be sure. 2) Should they have given notice to end my supply even when we didn't have a written contract in place? I do have an email from the director written a month before confirming that they would continue to supply me until I chose otherwise.

Really don't know where to go with this or how best to defend myself if it does go to court. I am joint owner of a mortgaged property and I am worried they will go down the charging order and then forced sale route.

Any advice would be great fully received.

[stevemLS]

Re: Outstanding Invoices/ Late payment charges

I'm afraid the bad news is that in accordance with The Late Payment of Commercial Debts (Interest) Act 1998 it is an implied term of any contract between two parties acting in the course of a business that interest is payable at the rate of 8.5% beginning 30 days after the other side perform their part of the contract.

Given the informal arrangement between you, which does not mean there is no contract, I don't think any of the provisions of the Act which enable you to reduce or oust this liability will apply.

Niether, I think, because of the lack of a contract, are they obliged to give you notice and the email you mention will be nothing more than an empty promise rather than creating any binding commitment.

Sorry.

[JTHG]

Re: Outstanding Invoices/ Late payment charges

Thanks Steve for your reply, it's much appreciated. I suspected this was the case but wanted to check. With this in mind would you recommend that if they do issue court proceedings that I should just accept the total amount ? I am still trying to keep nogotiations open with them but they are refusing to answer at present.

Thanks

[stevemLS]

Re: Outstanding Invoices/ Late payment charges

The more reasonable you can show your pre-action (if they issue) conduct to be, the better.

Have you made an offer to pay by instalments?

Others on here will say you shouldn't provide details of income/expenditure, my view is that this is misguided when you are seeking time to pay.

You should be able to check their interest calculations by reference to the dates of the invoices and sums due etc, there are online calculators but I am far too mathematically inept to do it - then you can make an informed decision about whether to accept the total sum they are claiming.

[JTHG]

Re: Outstanding Invoices/ Late payment charges

Thanks Steve once again for your help.

I am trying to be as reasonable as possible with them but I simply cannot afford the £1500 a month instalments they are suggesting, I have offered low monthly instalments as that is all I can afford and I have asked if they would consider a reduced lump sum payment if I could get one together. They have reduced both options.

I am trying to keep the lines of communication open but they have not replied to any of my emails for 11 days ( I have emailed the supplier directly and their solicitor. They are adding interest on a daily basis. Do you have any suggestions as to what to do or say next please? Is it a bad idea to ask them to refer the matter to the court as they are just not taking my situation and finances in to account. Am I naïve in thinking that the court will if I can demonstrate that I really am trying to get payment to the company?

Thanks

[stevemLS]

Re: Outstanding Invoices/ Late payment charges

You can't pay what you don't have.

As I said before, if you provide details of your circumstances to the creditor to show that your offer is reasonable, they should take account of that - certainly a court will not order you to pay more than you can reasonably afford and you should point that out to them.