“Ask the Legal Professional”
Pittsburgh Business Times – December 12, 2014
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.
• Payment Terms – Here are the due dates, rates, discounts, late fees, percentages and payment options (the heart of a good, working credit relationship).
• 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.
• 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.
• 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.
• Jurisdiction – This provision, also known as forum selection, partners with the Choice of Law Provision. Usually, a creditor wants disputes resolved close to their home, not the debtor’s.