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F E Smith
F E Smith, Advocate
Category: Law
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Experience:  I have been practising for 30 years.
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Is it legal uk or EU country company to demand payment terms

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Is it legal for a uk or EU country company to demand payment terms of over 60 days from a supplier?

Is the buyer demanding payment terms over 60 days after receiving the goods or, are they demanding payment terms over 60 days before they will entertain buying from the supplier?

Customer: replied 1 year ago.
Before buying.

Unless you agree a payment date then the customer must pay within 30 days of getting the invoice or the goods.

However the buyer is able to dictate whatever payment terms they like. There is no legislation to the contrary. For there to be a contract there needs to be an offer and a non-qualified acceptance. Hence, if they send you a purchase order where they will buy from you on 90 days credit and you then acknowledge it and say that you will supply them but only on 30 days credit, then what you have sent is not an acceptance but a counter offer which they would need to accept. There is also a rule called “the battle of the forms” where basically, the last shot wins. So you can keep sending correspondence to and fro and it’s the last terms before performance of the contract/supply which govern. There is a clause known as a “prevail” clause which says that regardless of anyone else’s conditions, one particular set of conditions apply but they not generally enforceable.

There is late payment legislation, if there are no late payment provisions in any contract documentation and these are in the form of the Late Payment of Commercial Debts (Interest) Act and the Late Payment of Commercial Debts Regulations. As soon as they are one day over the payment day due, interest accrues at 8% and you can charge a fixed sum, usually £50-£100 or thereabouts on a one-off basis as soon as the payment is late.

If you have late payment terms in your contract agreement, then the above legislation doesn’t apply. If the terms are on the back of your invoice that payment is 30 days and this is the first time you have dealt with this supplier, that term is post contractual and would not apply.

Can I clarify anything for you?

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Best wishes.

Customer: replied 1 year ago.

Thank you, ***** ***** recall that there is some EU legislation on this? Doesn't the buyer have to show exceptional circumstances or similar?

I think you are referring to Directive 2011/7 of 16 February 2011 which had clause 13 says (paraphrasing) contractual payment period should be limited as a general rule to 60 calendar days although it’s possible to agree longer periods provided that such extension is not grossly unfair to the creditor.

It’s rather a wishy-washy provision because a buyer is free to buy from that supplier or not.

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Customer: replied 1 year ago.

OK thanks.