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Invoicing Q&A

09 August 2013

As suppliers tighten their credit control systems and customers look for more favourable payment terms, Paul Gordon, our dispute resolution partner, answers common questions on invoicing and payment obligations.

Q1: A supplier has sent an invoice for products/services supplied a long time ago. Are we obliged to pay?

If there are no other issues with the products/services then the claim for payment is likely to be valid. If more than six years has passed it may be too late for them to ask for payment. In that case, you should seek legal advice.

Q2: A supplier has sent a further invoice for products/services previously supplied, alleging that they undercharged in the initial invoice. Are we obliged to pay?

The issues in answer one still apply. In principle, suppliers can invoice for more if they can demonstrate they had undercharged. A supplier who accepts part-payment does not necessarily waive the right to payment of the final balance. However, you may be able to refuse further payment if you can show:

(a) the supplier agreed to accept the earlier sums paid in full settlement. If you can show this, along with some form of additional consideration (for example, complying with a request to make early payment before due date) then there may be a case that the first payment defeats a claim for further payment of the same products/services; or

(b) promissory estoppel. A legal concept where you would need to demonstrate that the supplier’s conduct was such that he had waived his contractual rights to claim the further sum, the supplier intended that you would rely on that conduct and that you changed your position based on such reliance.

Q3: We paid invoices late and the supplier of products/services is now claiming statutory interest. Are we obliged to pay?

For most business-to-business contracts for goods and services, the right to both interest and a fixed sum can arise under the Late Payment of Commercial Debts (Interest) Act 1988.

The fact that you have already paid the principal amount without a demand for statutory interest does not rule out the supplier’s right to claim, unless you are able to rely on one of the grounds described in 2(a) or (b) above.

If you have any questions regarding invoicing disputes for your business, please contact our dispute resolution team.

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