Welcome to our June Commercial Credit Management Q&A Blog
Question One: We have a customer who refuses to accept payment by Direct Debit and wants to pay by Standing order. We have said we will agree if we can add a £15 per month charge onto their account if their account goes into arrears to cover us for the additional admin of chasing payment. They have not replied but continue to pay monthly. However, the service we provide has increased at their request and they are now in arrears as they have not increased their standing order to the new fee. Are we able to charge the additional £15 per month?
Answer: With regard to the £15 per month, that may be difficult to enforce that charge without their express agreement. You may want to add that to your standard terms but if you do, you need to say it’s to compensate you for additional administration time chasing the debt, otherwise it may seem as a penalty which is unenforceable. On a practical level, you might want to charge the £15 and use it as leverage to get any actual debt paid.
Question Two: We send out our invoices and Direct Debit notices manually via email each month, but we are looking to automate them. What I need to check is if it is ok that the DD collection date (notice) is ok just to only be on the actual invoice each month, or do we still need to send an email notice too? As we use go cardless as our DD provider, they also send out an email to our clients a few days before the payment is taken from our clients account.
Answer: The Direct Debit Guarantee Scheme specifies you must give the customer advanced notice of the payment value and date the payment will be taken from their account. The standard time for this notice is 10 working days although you can request a shorter time if your bank agrees. You can just have this notice on your invoices as long as its clear and the date for taking payment is no less than 10 working days from the date of the invoice. There is no requirement to advise youor customers of the date and value of the DD in addition to the invoice stating when and how much will be collected from their bank.
Question Three: A Client’s DD failed, he then cancelled the contract. He gave 30 days notice by email, we confirmed his cancellation the same day by letter, which included the final amount due. He has refused to make any further payment. As part of our service, we supplied Microsoft 365 licences. I want to make sure we can use his 365 licences as leverage to get payment. I want to send out “letter with interest” and also include that we will suspend his licences until full payment is received within 7 days (or shorter if we can safely do so), which will impact his ability to send /receive emails etc. What wording should I include in an LBA?
Answer: Yes, under your terms and conditions, you can suspend services with giving notice. Your contract doesn’t say 7 days but that is viewed by the court as reasonable, but you can choose to give more notice if you wish. Is the office 365, subscribed for a longer period than the notice period? If so, you are entitled to charge them for the balance of the contract. I suggest you send a detailed Letter Before Action & refer to the above clauses of T&C’s. Also add interest & compensation.
Question Four: We currently attach our T&Cs with each quote and invoice but would like to be able to reduce the length of our documents and we now have 3 different sets of T&C’s depending on the service we are providing. Is it sufficient to simply have our three distinct T&Cs listed on our website, and on each document we state: Please note that this [eg Quotation] is subject to the Terms and Conditions of xxxx Limited, the latest version of which can be found at : http:// xxxxx/terms you will also expressly accept our Terms and Conditions
Answer: As invoices are usually after the contract is formed, there is no need to include them with the invoice. With regards quotes, whilst just to direct your customer to your website maybe sufficient, I always err on the side of caution. Under common law, terms must be made known to the buyer for the buyer to accept. There could be an argument that the buyer was unable to go on your website to view your terms therefore was unable to accept them.
If you have overriding signed terms that covers all current and future works and states that any variation to the agreed terms is only in writing by a director of your company, you need only mention on future quotes are subject to your standard T&C’s available on your website. If, however you are relying on ‘Acceptance by Conduct’ and do not have a specific signature on overriding terms, then I would recommend the relevant terms are attached to quotes for each different service, you only need to attach the terms for the service you are quoting for.
Question Five: we supply goods to our customers, if they don’t pay for them are we entitled to get them back?
Answer: Yes, you can if you have a retention of Title clause in your T&C’s and you can show your customer has accepted those terms either by signing them or conduct. You should also have in your terms that you have the right to enter their property for the purpose of removing goods that have not been paid for as if you do not, you may be charged for trespass. It is also important under a retention of Title Claim, you may need to show that the specific goods you are taking are those that have not been paid for, such as a serial number on the goods that are also reflected on the unpaid invoice/ proof of delivery.
NB Jenny is extremely experienced in contract law, is a fellow of the Chartered Institute of Credit Management and has successfully assisting clients to obtaining Judgment on disputed debts for the past 35 years. All advice given in blogs and on CMG UK’s website is from her experience and qualifications . This advice is not a substitute for specific legal advice and should not be relied upon as such.
