Which party dictates when bills are due, the payee or the payer?
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Which party dictates when bills are due, the payee or the payer?
We are a small business who has completed work for a larger company. We send out our invoices “Due Upon Receipt”. I called the company to ask the status of the payment and was told “We pay Net 60”. Do we have any legal ground to stand on to demand payment sooner?
Asked on June 1, 2012 under Business Law, New Hampshire
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
The answer is "neither party by itself; both jointly." That is, when bills are due is dependent on the agreement between the parties formed when then entered into the transaction. Even though you say the invoices say "due upon receipt," if the first the customer hears of that policy is AFTER they already entered into the transaction with you, you will likely not be able to enforce that term against them; neither party may unilaterally change terms or add new terms not agreed to between the parties in entering into the transaction. If you have your payment terms elsewhere--e.g. in marketing materials; on a sales or pricing proposal; in your service agreement or contract--then you should be able to enforce them against your customer; by doing business with you after having had notice of your payment terms, the customer would be deemed to have agreed to those terms.
However, again, if the payment terms are not brought up until after they've already done business with you, those terms are likely not enforceable. In that case, in the event of litigation, the courts would likely look to standard practice in your industry to determine what would have been your and your customer's reasonable expectations as to payment when you entered into the agreement.
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