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Interest on overdue invoices

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asked on Apr 20, 2005 at 02:18
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edited on Jul 7, 2018 at 21:44
 
Our company recently received a demand letter from an old supplier whom we have fully settled for overdue interest in late settlement of their invoices.

Upon checking of the invoices, I noticed that they did stamp a clause stating that "overdue interest of 1.5% will be charged on overdue invoices". However, as the invoices were sent through post, we have never sign confirming on the invoices.

Upon checking with some of my friends, they commented below :-

1. Even we did not sign confirming on the invoices, our payment made had actually indicate the acceptance of the terms of the invoices.

2. Thinking of normal clause in the invoices, we have ignore it has giving the indication that we have no objection to the charging if any.

My questions are :-

1. Is there any law in Malaysia that govern this eligibility to charge overdue interest on invoices? I understand from UK, there is this Late Payment of Commercials Debts Act allowing people to do so. What about Malaysia?

2. Is it a must for us as customer to protest on the invoices when there is this clause printed in small fonts (as most preprinted invoices do) or stamped? Since no law enforces this, can we ignore this as irrelevant to any sales contracts?

3. If there is any law govern this, which Act is it and how does they allow the charging of interest be?

I would welcome any sharing or thoughts on this matter as I am really shock to receive this demand letter.

Thank you.
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3 Answers

answered on Apr 23, 2005 at 15:38
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edited Jul 7, 2018 at 21:47
 
Our master used to tell me that knowing a little may  be worse than knowing nothing.  I have a feeling you are worried the worries, before the worries worry you.

You seem to have an inclination to look into the academic prospective than the reality.  It is more likely you are talking of a small sum of transaction value and involving negligible interest charges.  Is the effort spend on this justify for the effort?

However, your "problem" may be a good question for a law student to exercise his or her learning.  In a contract, the parties are allowed to come to an agreement on their own terms, as a general rule.  Some questions to be explored: Had the parties agreed on this late interest charged?  Can the term be implied, by statute [legislative] or custom?  I do not aware Malaysia having a statutory law governing this late payment matter.  Is this a custom?  I see most companies do not insist in this term even if it was agreed upon.

A good pointer is looking at your opponent.  Most creditors know that insisting clients to pay for late payment would cost more in the enforcement which they would well utilise the resources in doing better business.
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answered on Jun 27, 2018 at 12:17
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edited Jul 7, 2018 at 21:52
 
I have came across the same matter, being charged for late payment at 1.5% per annum as stated in the sales agreement. The matter brought to the court along with major course, the late payment and vendor's default. Court grants vendor late payment interest at 8% p.a. Means, late payment interest is chargeable, the rate to be fair.

Hope this helps.
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answered on Jun 27, 2018 at 12:30
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edited Jun 27, 2018 at 12:31
by   jeff005
1.  Printer at fault, normal commercial trading practice is 1.5% monthly stated.
2.  No need to be stated at invoice or signed. The T&C inside the Delivery Docket is good enough (have signed and chop). If one dispute the interests element, why continue to do business with this company?
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