What is the law regarding payments on goods?


As you run your business, you may buy goods and services from suppliers or sell goods and services to customers. These relationships will usually be governed by a contract.

A contract is a legally binding agreement between two or more parties that agree to abide by the terms as they are set out in the contract they sign.

If you are having issues with the late payment of an invoice and are looking to recover the outstanding debts, you might need the help of a civil litigation specialist reach an effective solution.

A valid contract

If you have provided someone with services or goods and you have not received payment, a solicitor may be able to help you recover that payment. You may, for example, be able to sue the person who has not paid you for breach of contract.

In order for there to be a legally binding contract between you and the other person, there must be:

  • An agreement between both you and the other party (either orally or in writing) for you to provide them with goods or services
  • Consideration for the agreement (for example a monetary sum)
  • Both parties must intend to be legally bound by the agreement

If you can fulfil the above requirements, you should have a legally binding contract with the other party.

Breach of contract

A breach of contract action can be started in the civil courts if they refuse to make payment. The law sets out a specific civil procedure that you must follow in order to bring an action. This procedure is set out under the Civil Procedural Rules (the CPR).

A civil litigation solicitor could help you comply with this procedure and recover payment from the other party.

In addition to recovering payment, the law may allow you to claim interest on the outstanding payment. This may be possible under the Late Payment of Commercial Debts (Interests) Act. This Act allows businesses to charge other businesses interest on late payments. However, please note that the Act only applies to commercial agreements, not agreements between private individuals.

If the outstanding debt is below £10,000, your claim will be heard in the Small Claims Court. Click on this link for further information.

Are you looking for a civil litigation solicitor to help you recover debt owed? Contact Law can put you in touch with a specialist solicitor for your case. Please call us on 0800 1777 162 or complete the web-form above.

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