Q: Late fee and unpaid sales commissions

Hi. As a freelancer in TX, client in AZ was chronically late needing numerous reminders for every invoice(12mo consecutively - except for the first)

For one invoice I added a 10%/mo late fee. Client eventually paid the invoice late, yet now months later he is ignoring the late fee. By paying the invoice, would that be a contract agreeing to the late fee set?

(Added after Mr. Frick's response: Better if I attempt collecting another allowable legal fee? I remembered I did advice him via email that a late fee would be added if not paid on time)

Would it be smart to demand payment or initiate mediation/small claims court filing?

Client also ended our agreement just as a few high value leads I nurtured for months were about to close. I've heard I may be entitled a % of those contracts if they did indeed close? Does anyone know?

Thank You

1 Lawyer Answer
John Michael Frick
John Michael Frick
  • Arbitration & Mediation Lawyer
  • Frisco, TX
  • Licensed in Texas

A: The act of paying the principle amount of an invoice, but not the late fee, when you unilaterally added a late fee to the invoice without the client's agreement does not create a contract pursuant to which the client agreed to pay a 10% late fee. Under the Texas Finance Code, an unpaid amount due pursuant to a written contract incurs interest at the rate of 6% per annum. The parties can vary this by agreement up to the maximum lawful rate of interest allowed which is currently 18% per annum. A 10% per month late fee equals an annual percentage of 120% which violates the Texas usury law. I recommend that you do not attempt to collect the 10% late fee.

With respect to leads generated through your efforts, in the absence of an agreement to the contrary, a commissioned sales representative is entitled to a commission if his efforts were the procuring cause of the sale transaction. The best evidence for that is what the buyer(s) say(s). If the buyer testifies that you were the procuring cause of the sale, your client owes you the commission unless your agreement with your client says otherwise.

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