Legal Question in Business Law in California

Our company has encountered a Contract Terms vs. Invoice Terms dispute. Our company agreed to Net 15 terms in a contract however, the vendor is sending us an invoice showing Net 30. The vendor is now charging us a large late fee for paying Net 30, per the invoice, instead of Net 15, per the contract. Can the vendor charge us the late fee or can we dispute it? Thanks for your help!

Asked on 3/08/19, 11:05 am

1 Answer from Attorneys

Timothy McCormick Libris Solutions - Dispute Resolution Services

I’m afraid an error on the invoice does not modify the terms of your contract. Personally as good customer service I would never enforce a late fee in a contract when I made an error on the invoice and misled my customer into paying late, but legally the contract controls the rights of the parties.

That said, however, late fees must be reasonable. The law treats them as liquidated damages. That means they must be fair compensation for damages the creditor suffers due to receiving payment late, but that would be too hard or costly to prove exactly. Excessive late fees are considered penalties which cannot be legally imposed or enforced. So depending on the size of the fee compared to the total of the invoice, you may have bargaining room there, especially if you have other vendor options and they want to keep you as a customer.

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Answered on 3/08/19, 11:19 am

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