Payment Terms Legislation In United Kingdom
The Late Payment of Commercial Debts (Interest) Act 1998, Section 4, was amended in 2013 to enact a maximum term of 30 days for public authority payments and 60 days for commercial terms, unless expressly agreed by both parties and not grossly unfair. Where no terms are specified in the contract the term is 30 days. Compensation for recovery costs is also provided.
Section 110 of the Housing Grants, Construction and Regeneration Act 1996 applies the ‘Scheme for Construction Contracts’ where a construction contract fails to provide a payment term. The scheme terms are 7, 17 and 30 days depending on the type of payment.
The Prompt Payment Code promotes timely payment of suppliers with a maximum of 60 day terms, working towards 30 day terms.
The Construction Supply Chain Payment Charter promotes a 30 day term standard by 2025.
The Network Rail Fair Payment Charter by the Commercial Directors Forum for the rail industry commits to terms between 21 and 28 days.
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