Liability for Delayed Payment Sample Clauses
The liability-for-delayed-payment clause establishes the responsibility of a party to compensate the other if payments are not made on time as agreed in the contract. Typically, this clause outlines the consequences of late payments, such as the accrual of interest, late fees, or other penalties, and may specify the calculation method or rate applied. Its core practical function is to incentivize timely payments and protect the receiving party from financial loss or cash flow disruptions caused by delays.
Liability for Delayed Payment. Where the Buyer fails to make payment at the agreed time, Paragraph 1 below shall apply.
1. Liability is subject to the period of delay (the liabilities in Sub-paragraphs (1) and (2) are not cumulative).
(1) If the delay is within 30 days, the Buyer shall pay to the Seller a penalty at a daily rate of 0.02% of the overdue payment from the next day following expiry of agreed payment term to the day of actual payment and such penalty shall be paid to the Seller within 7 days after the day of actual payment. Then, this Contract continues to be performed;
(2) If the delay continues for more than 30 days (this day shall be the same as the day in Sub-paragraph (1) above), the Seller is entitled to terminate this Contract. In case of such termination by the Seller, the Buyer shall pay to the Seller a penalty at 5% of the cumulative overdue payment within 7 days after receipt of notice of termination and the Seller shall refund all the payments already made by the Buyer. If the Buyer wishes to continue to perform this Contract, this Contract may continue to be performed with the consent of the Seller. The Buyer shall pay to the Seller a penalty at a daily rate of 0.03% (this rate shall not be less than the rate in Sub-paragraph (1) above) of the overdue payment from the next day following expiry of agreed payment term to the day of actual payment and such penalty shall be paid to the Seller within 7 days after the day of actual payment. “Overdue payment” refers to the difference between the due payment as set forth in Article 5 and the actual payment, or in case of payment by installments, the difference between the specific installment and the actual payment.
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