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sub-contracting and pay sub-contractors late and they are also BIFA Members, you are their customer and they can sue you for claims they have for up to six years from the date or knowledge of cause of action, if latent. There is no case law as yet on this point as far as I am aware –
although I suspect given what is online about the subject that debt collectors may have had some success if the claims are small for their customers as the payers may not think it is worthwhile to dispute the claim. The Act does have a clause permitting remission or extinction of
interest claims if the interests of debt demand it, given the conduct of the claimant at any time before or after the debt was created. Conduct would include any act or omission of the claimant. Remission or extinction can be for a period of time or the rate
of interest. This provision rather suggests that the Act is all about interest on current debt, otherwise the remission section would also deal with conduct after the debt is paid. There is a reported case on remission in the Court of Appeal in
which the judges consider circumstances where remission may be applied. This deals with cases where the claimant does not provide back-up to enable the paying party to understand what is being paid, but only in respect of parts of any debt that are unclear, not the whole of the debt if some is clear. In the event that full substantiation is provided but the
begin to mount up. Can it be claimed, or has the member waived any rights? Not under the BIFA terms now they have a non-waiver clause. However, if the Member forgets to incorporate the BIFA terms the Act will still apply, but there could be a waiver in such a case if the Member does not make it clear each time the debt arises that interest and compensation are still owing on prior debts, as each time the debt is cleared by a payment of the invoice sum with no interest and compensation, and no action is taken, this may be an implied acceptance of the payment in full and a waiver of the additional sums due.
Business decision It is of course a business decision for each Member as to whether it would want to sue a serial late payer or even claim interest and compensation, which would generally end in the loss of that client or at least an unhappy client. Managing debtors is not anything new but this Act can assist in
that management, but can it be used after the event? What if a customer goes into liquidation or administration? The liquidator/administrator has a duty to collect in the sums due for the benefit of the creditors? Should they pore over payment terms of their client and see whether any suppliers have been serial late payers, and then put in a claim for interest and compensation? The Act provides that interest ceases to run when the interest
would cease to run if it were carried under an express contract term, which is not particularly helpful but appears to suggest application of any underlying time limit in the relevant contract or the default position under the Limitation Act for a contract of six years. Is any party, including liquidators and administrators, entitled to
go back that far and claim late payment interest and compensation for up to six years? Remember that the time limit for claims in the BIFA terms applies against customers but not the other way round, and claims by customers against Members are dealt with under the Limitation Act. This means that if you are
July 2019
calculation appears to be wrong, then the correct sum in the payer’s eyes should be paid and a request to confirm the error should be made. In both cases the court expected remission would apply. In other words, a paying party can withhold a sum reasonably in doubt or not yet properly clear in terms of back-up. There was no discussion about cases where the debt had been
paid, albeit late, which may have been because the case was about withheld sums. However, as previously explained, conduct after the debt is paid is not dealt with in the section on remission in the Act. This is why it appears that one has to at least make the claim clear regarding interest and compensation before or while the debt is in existence. If the debt is paid without interest or compensation it would be advisable, if you do want to claim it at a later date, to assert positively that the payment is not accepted in full and final settlement of the debt as owing to late payment it should have included due interest and payment.
BIFA terms The BIFA terms are good support as they specifically assert reliance on the Act concerning late payment interest on all sums outstanding and contain a non-waiver clause, so ensuring, via a written agreement with the customer by authorised officers, that such claims would not be waived and would be available to be made for up to six years from cause of action arising. If you are paying suppliers and are paying late without good
reason, then from time to time it would be advisable to ask for confirmation that the account and any claims in relation to the account are up to date and that no sums are due in respect of any debts, including historic ones, with a view to blocking any claims in the future under the Act for interest and compensation. You may also consider sending remittance advices that assert
at the bottom that the sum remitted is accepted fully in respect of the invoice(s) referred to above by agreement between the parties. BIFA would like to thank Kay Pysden of Pysdens Solicitors for contributing this article
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If you are paying suppliers and are paying late without good reason, then from time to time it would be advisable to ask for confirm - ation that the account and any claims in relation to the account are up to date
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