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Can Interest be Charged if not in Contract

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LLC Licensor and LLC Licensee has a Intellectual Property Agreement.  The Agreement has a provision to pay royalties in month after the calendar quarter but does not have a provision for late interest if licensee is late in paying royalties due to Licensor.    Is there a California law which permits Licensor to charge interest for late payment?  If yes can you cite the law and reference #?   If no, what happens if Licensor performs audit of Licensee and finds under reported royalties were not paid to Licensor.  Can Licensor charge interest for late payment in this case?

Thank you

 

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You cannot charge interest (or anything else) that isn't specified in your contract.

 

That's basic contract law which you can study at:

 

http://www.lexinter.net/LOTWVers4/restatement_(second)_of_contracts.htm

 

If you find unreported royalties and the other party won't pay, you sue for it. When you get a judgment, you would be entitled to post-judgment interest on the award until it's paid.

 

You can seek pre-judgment interest as part of your claim, but getting it is iffy.

 

 

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1 hour ago, PCCPA said:

Is there a California law which permits Licensor to charge interest for late payment?  If yes can you cite the law and reference #?

 

Civil Code section 3304 provides that "[t]he detriment caused by the breach of an obligation to pay money only, is deemed to be the amount due by the terms of the obligation, with interest thereon."  Civil Code section 3289(b) provides that, "If a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after a breach."

 

However, Civil Code section 3290 provides that "[a]ccepting payment of the whole principal, as such, waives all claim to interest."  As a practical matter, I would expect that very few persons would willingly pay statutory interest if the contract does not expressly provide for same.  In your case, that would put the onus on the licensor to file suit to recover interest.

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4 minutes ago, adjusterjack said:

You cannot charge interest (or anything else) that isn't specified in your contract.

 

That's basic contract law which you can study at:

 

http://www.lexinter.net/LOTWVers4/restatement_(second)_of_contracts.htm

 

The restatements are all well and good, but they're not the law.

 

 

4 minutes ago, adjusterjack said:

You can seek pre-judgment interest as part of your claim, but getting it is iffy.

 

If a plaintiff sues for unpaid monies pursuant to a contract and obtains for judgment, there would be no question that the judgment would include prejudgment interest.

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