Legal Question in Business Law in California
Payment for Services Rendered
A business that I outsource work to recently sent me to collections because I was late paying their bill. I paid their bill and now they want me to pay the 40% collection fee before they'll release their work product to me. This doesn't seem right
1 Answer from Attorneys
Re: Payment for Services Rendered
In California, the practice of adding the flat percentage fee of a collection agency to the debtor's bill has been rejected by the California Supreme Court as an unfair business practice, even when the breached contract specifically provides for adding connection fees to the tab. See Bondanza v. Peninsula Hospital & Medical Center (1979) 23 Cal.3d 260. This case was decided by the Bird court and there was a significant dissent by several justices. However, I'd say that as matters now stand the business may not hold your work product hostage for payment of the collection fees.
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