Strong credit management starts with favourable contractual conditions. If there is a non-payment (and it happens to the best of us), the following contractual conditions will help you pay yourself. Consistency is key: No matter what you think your customers are going to pay, you need to apply the following techniques consistently to prevent non-payments. Anyone who offers a product or service without having paid the full amount in advance provides a credit. Well managed, credit is a good thing. But it also has a well-known drawback: non-payment. The techniques used to manage non-payments are generally known as “credit management”. A 2008 case before New South Wales Supreme Court Lime Telecom Pty Ltd v Powertel Limited [No. 1] [2008] NSWSC 324 is a perfect example of how a contract for non-payment is not terminated. In this case, Powertel was a telecommunications operator providing telecommunications services to Lime Telecom, which were essential to Lime Telecom`s business. The contract for these services allowed powertel to terminate the termination if: The contract will likely have a “Termination” (or similar) section describing precisely when an innocent party can terminate its relationship with the other party and whether a termination is to take place. As a rule, one can see a provision allowing termination without notice in case of non-payment by a customer.

Note that terminating a contract without notice is a last resort option and you should seek advice before exercising it. It is essential that service contracts are developed with great care and adapted to each company before the start of a business relationship. In our experience, non-payment is often a key topic that a supplier wants to protect themselves from as best they can. Non-payment for services can be considered a “repugnant breach” of a contractual condition by the customer. In commercial law, a “condition” is an important concept that goes to the root of the agreement, but does not automatically terminate the contract. The injured party will be faced with two options; to accept the infringement and terminate the contract or to validate the contract and keep its conditions up to date. A supplier may have accepted the infringement if it has waived, for example, taking action where the customer has not paid repeatedly in the past. If the customer suspends work after confirmation of the contract, he may be entitled to an infringement against the supplier who has not provided services under the contract. Question: “Otherwise, can I terminate the contract in case of non-payment?” If, in this situation, there is no explicit right to suspend or terminate the provision of services, there is always a risk that the case could be brought before the courts. In this context, the Tribunal will analyse the contract as a whole and determine whether a right to suspend or terminate the contract can be included in the contract for non-payment (see above). . .

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