Creditors' Rights 32
Q: What are some suggested provisions for the terms I should be including in my credit agreement in order to protect my rights against a defaulting credit customer?
A: A credit agreement provides the terms and conditions of a credit relationship and sets the ground rules for any future conflicts. These legal provisions are among those I recommend for B2B transactions.
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Payment Terms – Here are the due dates, rates, discounts, late fees, percentages and payment options – the heart of a good, working credit relationship
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Interest – When are late fees assessed? At what percentage rate? Unless creditors obtain a signature on an agreement they may not be able to legally collect one.
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Waiver of Jury Trial – Credit criminals find wiggle room in asking for a costly jury trial. This provision waives the jury trial in the honeymoon phase of a relationship.
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Choice of Law Provision – Sellers – or their attorneys- usually understand the laws in their state (or know which states are favorable) and want them to apply in any dispute.
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Jurisdiction – This provision, also known as forum selection, partners with “choice of law.” Usually a creditor wants disputes resolved close to home –their home, not the debtor’s.
*Learn more about credit policies and the Payment Gap with Bob Bernstein’s new book, Get P.A.I.D.TM A Guide to Getting Paid Faster (and What to Do if You Don’t!) at www.getpaidsystem.com
