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Ben Jones
Ben Jones, UK Lawyer
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My client has consistently paid late during my building

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My client has consistently paid late during my building project (10 out of 13 payments ) and has signed a contract on which it outlines conditions that state that by signing you agree to the terms and conditions and that by paying late will result in an 8.5% interest charge on the said instalment. I want to exercise this right and claim the money owed based on the breach of contract on each late payment. Could you confirm I have a right and can claim this breach?

Hello, my name is***** am a qualified lawyer and I will be assisting you with your question today.

What reason has the client provided for being late with payments?

Also is there a specific payment date by which they must adhere?

is there a specific payment date by which they must adhere?

Hello, not sure if you saw my initial query above - is there a specific payment date by which they must adhere?

Customer: replied 1 year ago.
Hi Ben sorry for the delay. There has never been a reason given for late payments apart from the penultimate instalment. However, our contract also states that the client cannot change the instalment payment date without agreement from us in writing 7 days before the said instalment is due.
There is clear instructions on the contract which state the W/C date. The day the funds must be clear by on this WC week is Thursday between the prescribed hours of 8am and 5pm and the contract also states to check with their bank to ensure there is no delays.

Hello, thanks for getting back to me. It is indeed possible to change interest for late payments and many companies do so. You just need to ensure that there is a clear contractual right allowing you to do so and it has been exercised properly, meaning that you can show the conditions to trigger these charges have been satisfied.

Also remember that interest accrues daily and depending on what the actual amount owed is this may not be a very large payment. For example, for an amount of £10,000 the daily interest is around £2.30 and it would only accrue from the time the contact says it would, such as the date the payment was due but was delayed.

I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating by selecting 3, 4 or 5 stars - this is an important part of our process and recognises the time I have spent assisting you. If you still need me to clarify anything else, please get back to me on here and I will assist further as best as I can. Thank you

Customer: replied 1 year ago.
Hello Ben, the contract States its 8.5%interest charge on the 'instalment amount' that has been paid late. Not daily interest.
Therefore the amount in interest owed is £9,647.50 10 x £11,350 late payments @ 8.5% The money has not cleared into my business account in line with the contract that we both signed. Although 2 payments have been made on time confirming that he has consciously paid late 10 times. Can you confirm that I can claim this amount?

You would be very unlikely able to justify charging an immediate rate of 8.5% on the whole amount – this is likely to be considered a penalty clause which is illegal and unenforceable under UK law. The law allows you to charge ongoing interest on late payments and this would be at the rate you have specified but such a large interest charge on the whole amount is very unlikely to be considered fair or unenforceable. What you can purse them for is daily interest rate from the date the payment is late up until the date it is paid. Hope this clarifies?

Customer: replied 1 year ago.
Hello Ben, this was advised by another solicitor and is worded as an interest charge not penalty. Forgive my ignorance, but what needs to be justified ? If the client has signed and agreed to the said terms set out in the contract and then not as adhered to the contract and breached the contract then can I not exercise the right to claim the interest? Thanks in advance

Sadly it does not work that way. According to your analogy you could say in a contract that you would charge them 1000% straight away but just because they agree to it and sign it does not mean it is fair, reasonable and payable. Interest is there to cover for a potential loss to you as a result of not receiving the payment in time. So if they had paid you then you could have placed the money in a bank account and earned interest on it but you have bene unable to do so due to the late payment. So the losses would accrue daily from the time the payment was due, you would not have suffered an immediate loss of a whole year’s worth of interest and if you try to claim that straight away then that would quite likele be a penalty clause

Ben Jones and 2 other Law Specialists are ready to help you
Customer: replied 1 year ago.
Ok thank you

You are welcome, all the best

Customer: replied 1 year ago.
Hi Ben, I have had some other conversations with lawyers and solicitors. One thing mentioned was that if we as contractors didn't perform in a certain to period there is a penalty charge. You may be aware this is very common in building which of course is enforceable. Why is this not permissible on the flip side?

This will explain the interest rules better:

What you may be referring to is liquidated damages, but you need to be very specific about what damages you are trying to claim for and in your case you have not done so – you are simply relying on an interest clause and using it to charge interest without actually being able to show liquidated damages: