Invoice Payment Terms

Please note that this News item is not maintained, and reflects the law as at the date of publication or update.

It is common for a business to stipulate that its invoices are payable within a certain number of days.  However, a recent case (Consulting Concepts International Inc v Consumer Protection Association (Saudi Arabia)) has highlighted that businesses need to think carefully about when they are actually due the money and so when, if payment is not made, the limitation period will expire.

Consulting Concepts International carried out work for Consumer Protection Association (Saudi Arabia) and then rendered invoices which were said to be payable within 90 days.  The invoices all related to work completed before 17 December 2013, whereas the claim for payment was issued on 27 December 2019 (i.e. in excess of six years later).  More than $12 million was at stake.

In turn, the Court of Appeal held that, unless the parties agree something different in their contract, the right to payment accrues when the work or services have been performed or provided and, further, the right to payment does not depend on the making of a claim for payment (i.e. the issuing of an invoice).

In this case, Consulting Concepts International’s contract was unclear as to whether the submission of its invoices was a precondition to its entitlement to payment or whether it was just a step that had to be taken before a formal claim for payment could be maintained.

The upshot was that Consulting Concepts International’s claim was out of time.  Its contract terms had not spelt out that its entitlement to payment only arose on the submission of its invoices.

For more information about this topic, contact Jeremy Laws.

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