07 Feb 7 JUNE 2011 – DEFAULT INTEREST
Q. Is a Seller limited to claiming interest at the “Default Interest Rate” when they are asked to extend for example the settlement date?
A. No. A Seller may agree to extend or not agree to extend on whatever terms they wish and then its a matter for the Buyer to elect whether to proceed with the request for the extension or not. The “Default Interest Rate” referred to in the Item Schedule of the Contract relates to late payments of money as referred to in Clause 9.6 of the Conditions of the Contract. That is, if a payment of money due under the Contract is not paid when due the Buyer must pay interest at settlement calculated at the Default Rate on a daily basis.
The Default Rate of interest may be one way the parties reach agreement on how much the Buyer pays the Seller to compensate them for any loss as a result of extending for example the settlement date but the Seller is not limited to claiming compensation at that rate.