The Frame Bank, 0% interest for short term loans.
I have my own bank with the same rate.
The Frame Bank, 0% interest for short term loans.
I have my own bank with the same rate.
We pay our subs immediately.?ÿ We want them to respond immediately.
Spledeus,
I will say that you are definitely in the minority on that.?ÿ Every contract I sign seems to have a paid when paid clause.?ÿ I was recently a sub on a state funded project that it took over a year to get payment on.?ÿ It seems that before I submitted my invoice the prime had gone over their portion of budget.?ÿ They would not pay me, or any of the other subs, until after the negotiated additional fees with the State.?ÿ What I really need is some verbiage to ensure that paid when paid does not turn into never being paid.?ÿ I don't get to tell my employees or vendors that I will pay them when I get paid.
As for interest, I have never seen a government type contract that allows for interest.?ÿ My standard contract starts the clock 30 days after the due date which is usually 30 days after receipt.
I like that you have the interest set at the highest allowable by law, but you might double check the time frame for when that interest rate can kick in.?ÿ It may also be covered in statutes for your state.?ÿ In addition, you might want to double check just how much you can re-coup (by statute) if it ends up going through the court system - the 15% may or may not be enforceable.
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Question - was this agreement language prepared in house or by an attorney on your behalf??ÿ If not by an attorney, might be wise to consult with a good attorney with experience having professional service businesses as clients to see if there may be valid reason for the request to remove the language.?ÿ If it ends up being unenforceable in court, no need to worry about if it is in there or not.
If i recall correctly it was actually written by the counsel for NCBELS and was provided as a sample contract for surveyors in a seminar I attended a while back.?ÿ
Every contract I sign seems to have a paid when paid clause.
That clause is not enforceable in California.
All the contract language about interest and legal fees is nice, but actually collecting those is another matter.?ÿ Getting a judgment on a failure-to-pay charge is feasible if the amount is small enough to bring the action in Small Claims Court, but if the amount throws you into Superior Court (or whatever your state calls it), the practicality level drops precipitously.?ÿ I've been told that litigating anything in Superior Court in CA will cost a minimum of $50k.?ÿ You have to get stiffed pretty badly to make it worthwhile.
Once you get a judgment you're faced with the task of collecting on it.?ÿ I've brought suit in Small Claims Court 4 times in 25 years.?ÿ 2 of those paid up before the hearing, the other 2 produced judgments in my favor.?ÿ Of those I was able to collect on 1, the other was a judgment-proof guy.
What I really need is some verbiage to ensure that paid when paid does not turn into never being paid.?ÿ
I found (and have used) language from the Washington Association of General Contractors that seems pretty fair.?ÿ
Their language is "Under the ??pay when paid? alternative, the subcontractor agrees that payment is not due until 10 days following receipt by the general contractor of the owner??s payment, or until after passage of a ??reasonable time? after such payment is due, which under the clause is deemed to be 90 days."
I've modified a number of contracts by putting an asterisk next to the term "pay when paid" and adding a footnote that says something like "pay when paid means that payment is not due until 10 days following receipt by the general contractor of the owner??s payment, or until after passage of a ??reasonable time? after such payment is due, which under the clause is deemed to be 90 days."?ÿ
Everyone has been fine with this until just recently that one prime pushed back on my edit. I explained that we have no contractual relationship with the client and no ability to pursue payment from them - that if they negotiate some kind of deal to accept no payment in exchange for something - then we get nothing. I explained that our business model wouldn't support not getting paid.?ÿ Fortunately, our workload was such that we'd be happy to walk on this one - the client ultimately agreed and I kept the discussion upbeat and positive - they agreed to the language and hopefully, they won't view us as "difficult".?ÿ Regardless - we won't work under a "pay when paid" clause unless that term is defined to have an acceptable time frame. We can wait a bit but we can't work for free.
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