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Recovering Debts WITH INTEREST - 2nd October 2013 - Click for larger version Recovering Debts WITH INTEREST - 2nd October 2013

A recent partnership dispute resolved in the Court of Session serves as a reminder to creditors that, in addition to being entitled to payment of the principal sum owed, you will often be entitled to be paid interest even if you do not have a written contract in place which provides for payment of interest.

In this case, a partner had resigned from a firm in May 2003. As a partner he was entitled to a share of the firm’s assets. The retired partner raised Court action against the firm. After several years of dispute and delay the principal sum which would be paid to the retired partner in respect of his share was agreed. However, dispute remained in terms of the interest which was payable on this sum.

There was no written partnership agreement which stated that interest was payable. The Partnership Act 1890, however, provides that if a partner ceases to be a partner of a firm then the partner is entitled to interest at the rate of 5% on his/her share of the firm’s assets from the date of cessation.

Interest on a principal sum of £276,611.35 at the rate of 5% from May 2003 until payment was awarded by the Court. As at today’s date that would equate to around 50% of the principal sum.

The rate of interest applied in this case is particular to partnerships and shares of the firm’s assets. However, businesses generally are entitled to payment of interest from commercial debtors.

Businesses who have supplied goods or services to another commercial party are entitled to be paid interest at 8% above the base rate of the Bank of England in terms of the Late Payment of Commercial Debts (Interest) Act 1998. Unless it was agreed payment should have been made on a particular date, interest will start to run 30 days after either the date the goods/services were supplied or the date of invoicing (whichever the later). Businesses are also entitled to an additional sum of compensation for late payment (ranging between £40.00 and £100.00, depending on the sum of the debt).

You may well be entitled to interest and compensation for extra work and cost you require to expend as a result of late payment, and should you require any assistance in recovering debts please contact Alan McKee(alan@macdonaldhenderson.co.uk) or Michael Hankinson (michael@macdonaldhenderson.co.uk). Alan and Michael can also be reached on 0141 248 4957.

Whether you have occasional debts or a consistent volume which require to be pursued, we can do so on your behalf.

Last updated: 11.46am, Thursday 3rd October 2013

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