Q: Can I charge a 1.5% per day late fee as long as it doesn’t exceed a total of 10% for the month? It will cut off at 10.
I’m a freelance web designer. My payment and late fee section states payment is due 14 days after invoice date. After that, a 1.5% per day late fee is assessed.
The Client is flexing his retired lawyer muscles and saying I’m violating the law with this request. However, Maryland Code Commercial Law Title 14 - Misc Consumer Protection Provisions Subtitle 13 - Misc Provisions Section 14-1315 - Late Fees states up to 10% per month can be charged.
So for instance, if the Client is 15 days late, instead of just dropping a full 10% late fee on them, on the 16th day, I do 1.5%. If they pay me then, they’ve only been charged 1.5% as opposed to the full 10. Does this make sense?
My contract was prepared using an online contract service. I’m not sure how my contract is wrong considering that. Maybe it just needs clearer definition?
A: On the surface, I see no reason you couldn't structure your late fee in that manner. But you should clearly say it is capped at 10% per late payment. Or, you could charge the 10% on the 15th day with a discount credited if they paid between 15 and 22 days late. Or, just keep it simple and charge the 10%.
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