Glossary

Late payment

Last updated 07 June 2007

Description

Clause outlining how the parties will deal with late payment.

In the event of late or delayed payment, this clause would provide rights to the party awaiting payment. This would normally take the form of charging interest at a recognised bank rate plus several percentage points.

In the event that late payment becomes a recurring issue, the clause may escalate proceedings to a point where it may becomes a breach of contract. However careful drafting should ensure that late payment is not used to trigger contract breach, which may in turn trigger termination of the agreement.

Examples

Clause: Late Payments.

If any payment due to ACCESS under this Agreement is not received by ACCESS within ten (10) days of the due date, then, commencing from the date on which such payment was due the amount of such payment shall accrue interest calculated at an annual rate equal to the prime rate plus two percent (2%) until such time as payment of the overdue amount is made in full; provided that no interest shall accrue on any amounts being disputed in good faith by WYETH with respect to which WYETH is making diligent and good faith efforts to resolve. -- License and Supply agreement between Access and Wyeth, January 2004