Legal Question in Business Law in California

I have a consulting contract that states "Absent of good faith dispute, such fee shall be paid within 30 days of receipt of an invoice by the Company, which invoice will include original receipts for reasonably incurred expenses". I'm to be paid "1 1/2 % per month for past due payments."

The problem is I've submitted "late fees" in excess of $1,000 over the past year and the company has just responded by saying ..."X-Company's account department must remove funds from X-Companies account (e.g. cut a check) within thirty days of X-Companies receipt of the invoice..."... and "X-Company has no direct control over delivery of a live check tendered for the payment".(FedEx ring a bell?) In simpler terms they're saying as long as they "cut" the check w/i 30 days I've been "paid within the 30 day terms".

That has to be the most absurd "stretching" of legal language I've ever heard of! A check NOT received is NOT paid in my mind. Is there any legal definitions for what "paid" means? I have multiple emails between myself and several of the company representatives acknowledging check 101 or 112 was late and they'd try to help however, once I submitted an invoice with cumulative late fees things got tossed to the attorneys and my contract was prematurely cancelled! This is a $5 billion per year BioTech company!

Thanks for any help I can get.


Asked on 3/02/10, 11:55 am

2 Answers from Attorneys

The definition of "paid" requires the payment to be tendered. Cutting a check and holding it is not tendering it. However, depositing it in the mail may constitute tendering it. The IRS considers your tax return and any tax due to be tendered when it is deposited in the mail for delivery, for example. Since your contract does not specify the method of tendering payment, they have a reasonable argument that if they mail it within the 30-days it has been tendered on time and is not late. Quite frankly, given the economy and the number of consultants in most every field who are looking for clients, I'm not at all surprised they decided they didn't need the services of a consultant who makes a legal issue out of something like this.

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Answered on 3/07/10, 12:19 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Yep, I agree with Mr, McCormick. When the parties have not specially agreed otherwise, a bill submitted by mail should be deemed apid on the date the payment is postmarked, but making a stink over late payment is likely to get you terminated as to future engagements.

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Answered on 3/07/10, 8:20 pm


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