The Lifeline Project was a well-regarded charity. Failure to carry out the targets within the contracts led the charity into insolvency and resulted in a personal, 7-year disqualification order.
The Late Payment of Commercial Debts (Amendment) Regulations 2018 came into force on 26 February 2018, and apply to contracts made on or after that date.
What are the Regulations and when do they apply?
They amend the Late Payment of Commercial Debts Regulations 2002, which in turn amend the Late Payment of Commercial Debts (Interest) Act 1998 (the ‘Act’). The Act has two purposes – to deter late payment and to compensate creditors for the late payment of debts.
The Act and Regulations apply to contracts for the supply of goods or services where both parties are acting in the course of business (subject to some exceptions). It allows creditors to claim interest, a fixed sum of compensation and, in some circumstances, the reasonable costs of collecting the debt.
The Regulations seek to tackle late payment in commercial transaction deals by imposing a rate of 8% above base rate per annum on overdue payments that relate to goods and services.
What do the 2018 Regulations do?
They substitute the original Regulation 3 for a new provision that allows representative bodies to challenge grossly unfair contractual terms and practices in, or in relation to, contracts to which the Regulations apply.
The Regulations do not provide a definition for ‘grossly unfair’, current cases addressing this point are few and far between. The Government has explained, if it is easier for disputes relating to unfair payment terms and practices reach court, the courts may have more opportunities to determine what terms and practices are ‘grossly unfair’. The intent appears to be to allow for more case law, which will ultimately result in more clarity for businesses.
The Regulations also expand the ability of representative bodies to challenge contract terms on behalf of any sized business with the intention of seeking to address the power imbalance between SMEs and larger companies (who may have more influence when entering into contracts). Representative bodies are organisations established to represent the collective interests of any enterprise, either in general or in a specified sector or location. Any business can approach representative bodies for assistance, those bodies have discretion and flexibility whether to take on a case or not.
What are implications of the Regulations?
The Regulations will make it more likely that any unfair payment terms included in such contracts, will result in a challenge. This is particularly true given the fact they allow any business to approach a representative body where they consider that a contract they have entered into, may contain grossly unfair contractual terms and practices.
On 23 July, trainees from Anthony Collins Solicitors will host an ‘experience day’, which will involve various activities and presentations, with lawyers and non-lawyers from across the firm.
The Office of the Immigration Services Commissioner (OISC) has launched a new scheme specifically for charities and not-for-profit organisations who want to advise EU citizens on UK settlement.
In the second part of our series on contract management pitfalls, we look at the risks and opportunities presented by payment mechanisms in construction contracts.
Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
The UK Government has been consulting on how it should promote social value in its procurements. Here is our response that we submitted to the consultation...
The Tenant Fees Act 2019 came into force on 1 June 2019.
A recent case in the Court of Appeal will no doubt bring a sigh of relief for employers, but a corresponding sigh of disappointment may be uttered for equality and gender balance in the workplace.
This briefing assists response to the consultation paper by outlining the consultation questions, providing some background information and prompting some thoughts and potential answers.
A report published on 29 May by the Institute for Fiscal Studies (IFS) has found that since 2009-10, local government spending on services has fallen on average by 21% in real terms.
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