This clause requires you to pay part or all of the contract price before the other party delivers goods or services. For example, you might pay 50% upfront and 50% on delivery. Advance payments create real financial risk for the paying party: if the supplier goes bankrupt or fails to perform, you may lose your money with little recourse. In both UK and US law, advance payments are generally enforceable, but the paying party has limited protection unless the contract includes specific safeguards like escrow accounts or performance bonds.
Minimize advance payments—push for payment on delivery or in installments tied to completed milestones rather than upfront. If advance payment is unavoidable, insist on security: require the supplier to place your money in an escrow account (held by a neutral third party) that's only released when they perform, or demand a performance bond or parent company guarantee. Never pay more than 25–30% upfront unless the supplier is very well-established and you've checked their financial stability. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires you to pay part or all of the contract price before the other party delivers goods or services.
Why should I care about this clause?
For example, you might pay 50% upfront and 50% on delivery.
What are my options?
Advance payments create real financial risk for the paying party: if the supplier goes bankrupt or fails to perform, you may lose your money with little recourse.
How does this affect small businesses?
In both UK and US law, advance payments are generally enforceable, but the paying party has limited protection unless the contract includes specific safeguards like escrow accounts or performance bonds.