Remedies are some form of compensation – often money but sometimes more time – that you can receive if your contract partner fails to comply with the contract. These terms can help to trouble-shoot issues and resolve disputes quickly. Classic examples in the construction industry include damages for delay and extensions of time for delay.
In B2B and B2C contracts, one major cause of disputes is late or non-payment. Typical remedies you could include in your contract are adding interest, stopping work or ending your contract.
Interest Late Payment
My architect’s remedy for late payment is to charge interest:
“if payment of any sums properly due is not made within 7 days we reserve the right to charge interest under the Late Payment of Commercial Debts (Interest) Act 1988 (simple interest at 8% over the Bank of England base rate…”
While the sentiment is correct, the reference to the Act is not. As the Government Website confirms, interest can only be charged under this Act on debts between companies.
My email marketing specialist, has a different approach. His terms say:
“A 5% monthly service charge is payable on all invoices over 30 days…”
But this equates to somewhere between 60-80% over a year which is considerably more than 8% above base (as the Act allows).
Your contract should include remedies, although not like these!