This clause allows one party to change the payment terms (the number of days you have to pay an invoice) during the contract, usually based on circumstances like poor payment history, financial problems, or changed business conditions. It matters because payment terms directly affect your cash flow—if a supplier suddenly reduces your credit period from 60 days to 30 days, you must find cash faster, which can strain your business. Under US law, there's no automatic protection against sudden changes, so this clause determines whether a party can unilaterally alter the deal or must negotiate. For example, a clause might say "the seller may reduce credit terms to 14 days if the buyer misses two consecutive payments."
Resist any clause that lets the other party change payment terms unilaterally (on their own decision); instead, require that any changes must be agreed in writing by both parties. If the other party insists on the right to adjust terms, limit it strictly—for example, allow them to shorten credit only if you've actually missed a payment, not just if they suspect financial problems. Build in a notice requirement (e.g., "30 days' written notice before any change takes effect") so you have time to plan your cash flow. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause allows one party to change the payment terms (the number of days you have to pay an invoice) during the contract, usually based on circumstances like poor payment history, financial problems, or changed business conditions.
Why should I care about this clause?
It matters because payment terms directly affect your cash flow—if a supplier suddenly reduces your credit period from 60 days to 30 days, you must find cash faster, which can strain your business.
What are my options?
Under US law, there's no automatic protection against sudden changes, so this clause determines whether a party can unilaterally alter the deal or must negotiate.
How does this affect small businesses?
For example, a clause might say "the seller may reduce credit terms to 14 days if the buyer misses two consecutive payments."