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Charging Interest On Outstanding Accounts

27th January 1933
Page 54
Page 54, 27th January 1933 — Charging Interest On Outstanding Accounts
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Which of the following most accurately describes the problem?

T N these days, when an ever1. increasing extension of credit is demanded in all spheres of business, including the transport industry, it is not an unimportant question to consider whether it is possible to add to large, long-overdue accounts a charge for interest on the balance owing. It is surely not unreasonable for a man to ask his customers to allow him interest on their unpaid accounts, and, when a number of such cases is taken into consideration the total amounts received in respect of this interest may represent a considerable sum.

Does the law entitle a man to add a charge, by way of interest, to his customers' unpaid accounts? Generally speaking, it does allow such action, but it is necessary first of all, to comply with various simple rules and regulations. On the other hand, what the law does not allow is for a mart, without previous notice, to add to a debtor's accounts an additional charge for interest on the outstanding balance.

The Act of Parliament with which we, shall have to deal in answering our quration is the Civil Procedure Act, of 1833, and particularly with

B40 Section 28, which reads as follows :—

" Upon all debts or sums certain, payable at a time certain or otherwise, the jury on the trial of any issue, or on any inquisition of damages, may, if they shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest, from the time when such debts or sums were payable, if such debts or sums be payable by virtue of some written instrument at a certain time, or if payable otherwise, then from the time when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest Will be claimed from the date of such demand until the term of pay meat; provided that interest shall be payable in all eases in which it is now payable by law."

This section needs little further explanation, but it must be pointed out that it is wise to take two precautions. One should keep a copy of the notice sent to the debtor and a note of the date on which it was sent, and make it quite clear that interest is to be charged on whatever balance may be outstanding from that date. If care be taken over these two points, no difficulty should arise.

Apart from a notice under the section quoted above, interest can, of course, be charged when there has been an express or implied agreement between the parties as to this. An implied agreement of this description might arise where such has been the usual course of business betwev the parties on previous occasions, and interest has been paid by the debtor.

In any case, whether wider an express or implied agreement, or by virtue of the provisions of tha statute, interest can be charged provided that,, where necessary, the various regulations are met.

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