Statutory interest and compensation in business to business transactions

legal updates

The compensation starts at £40 for commercial debts of less than £1,000 and escalates to £100 for commercial debts of £10,000 or more.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

It is widely known that late payments in business to business contracts attract statutory interest, presently at 8.5% unless another rate is envisaged under the contract.

The Late Payments of Commercial Debts (Interest) Act 1998 stipulates also that the interest will generally start running from 30 days after the goods are received or services provided. The contract may stipulate longer interest free periods, however a period longer than 60 days is very likely to be deemed unreasonable and curtailed to the 60 days’ maximum. The statutory interest can only be ousted when the contracts provides for another substantive remedy.

The less known is the statutory fixed sum compensation under the Act in connection with the debt recovery. The compensation starts at £40 for commercial debts of less than £1,000 and escalates to £100 for commercial debts of £10,000 or more. The full compensation amount falls due largely in the same circumstances when the statutory interest starts to run. It may be useful to rely on the entitlement to the statutory compensation when the debt has only recently fallen due and the statutory interests produces a negligibly small amount. The statutory compensation is the minimum remedy and the actual cost of recovery may be claimed if equates to a higher amount, subject to the common rules applicable to direct and consequential damage.

HaswentWebsites for dealers small and large

Composer is a next-gen automotive platform that has been designed from the ground up to give you an intuitive way to promote your stock. You have extensive stock management options, and you'll gain a brilliantly responsive new website to advertise your stock, starting at just £39.99/month.

Kiril MoskovchukLegal AdvisorRead More by this author

Related Legal Updates

Help! I am being chased for interest and compensation against invoices I paid years ago

We would advise you to check your contracts with suppliers for the payment terms and what happens in the event of late payment.

Spring Budget 2021 – New Covid business support measures

The Chancellor announced a raft of new Covid grants, loans and extensions to help businesses on the roadmap out of lockdown, which we have summarised as follows…

Chasing a debt

You now have to give the person 30 days to respond and either make payment or send back the reply form and information sheet.

Does the Government owe YOU?

UK small and medium sized businesses owed £26.3 billion in late payments.

Cheques – As good as cash

If you end up with a cheque which is bounced, the next step is to put the drawer on notice of the dishonoured cheque.

New rules for those chasing bad debts

If you are chasing a debt from 1 October 2017, you need to be aware of and follow the new rules.

Abuse of process – inappropriate use of the threat of insolvency

The Solicitors acting for the Creditor should have known better than to use the threat of insolvency for debt collection purposes,

Get in touch

Complete the form to get in touch or via our details below:

Phone
01480 455500
Address

Vinpenta House
High Causeway
Whittlesey
Peterborough
PE7 1AE

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.