Contract Claim
Your contract can be an effective collection tool provided it contains key payment provisions, and excludes others. And provided, of course, you meet the deadlines to commence a breach of contract action.
Key contract provisions
- Timing for payment
- Your contract should specify when payment is due.
- “Net 30” (payment within 30 days) is common.
- Beware of contingent payment clauses.
- If enforced, “pay-if-paid” and “pay-when-paid” clauses respectively forfeit and delay payment.
- Where possible, strike contingent payment clauses from your contract. Where not possible, attempt to convert “pay-if-paid” to “pay-when-paid” clauses, and set a deadline for payment–90 days from billing is common.
- If enforced, “pay-if-paid” and “pay-when-paid” clauses respectively forfeit and delay payment.
- Your contract should specify when payment is due.
- Interest
- You may specify any agreed upon rate of interest in your contract.
- Materialmen commonly charge 18% and even 24% per annum.
- (I have collected interest as high as 36% per annum.)
- Materialmen commonly charge 18% and even 24% per annum.
- Absent agreement, interest accrues at Wyoming’s statutory rate of 7% per annum.
- A provision in your invoice or billing statement specifying a rate of interest not agreed to in your contract is likely unenforceable.
- You may specify any agreed upon rate of interest in your contract.
- Attorney Fees
- To be awarded attorney fees on a breach of contract claim, your contract must include an attorney fees provision.
Contact me for help with your contract’s payment provisions.
Statutes of limitation (deadlines)
- Unless your contract provides otherwise, the deadlines are as follows:
- 10 years for breach of a written contract.
- 8 years for breach of an oral contract.
- 5 years after the debtor establishes residence in Wyoming for an action on a foreign claim, judgment or contract, contracted or incurred and accrued before the debtor became a resident of Wyoming.
My business is getting your paid. Contact me to discuss your case.
Other considerations and topics for discussion
- Beware of “no lien” clauses that could preemptively waive your lien rights.
- Beware of “no-damage-for-delay clauses” that could limit your claims.
Please let me know if you would like to discuss these or other contract clauses. (I draft, review, and negotiate contracts, too.)
