This clause sets out the formal steps both parties must follow if they disagree about whether money is actually owed. It typically requires one party to notify the other in writing, give a deadline to respond, and often requires attempting to resolve the dispute before going to court. This matters because without a clear procedure, disagreements can escalate quickly and expensively—under English law, for example, the Late Payment of Commercial Debts (Interest) Act 1998 automatically adds interest and compensation to unpaid invoices, so a clear dispute process can prevent this. A specific example: the clause might say "the buyer must notify the seller of any invoice dispute within 14 days, or the invoice is deemed accepted."
Push for a dispute procedure that gives you at least 14-21 days to investigate and respond to any claim against you, and require the other party to provide detailed written evidence of their complaint. Avoid clauses that say disputes are "deemed accepted" if you don't respond by a certain date, as this can lock you into paying money you genuinely don't owe. If you're the one owed money, ensure the procedure doesn't delay your ability to take action—for instance, you might agree to negotiate for 30 days, but after that you retain the right to pursue legal remedies. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause sets out the formal steps both parties must follow if they disagree about whether money is actually owed.
Why should I care about this clause?
It typically requires one party to notify the other in writing, give a deadline to respond, and often requires attempting to resolve the dispute before going to court.
What are my options?
This matters because without a clear procedure, disagreements can escalate quickly and expensively—under English law, for example, the Late Payment of Commercial Debts (Interest) Act 1998 automatically adds interest and compensation to unpaid invoices, so a clear dispute process can prevent this.
How does this affect small businesses?
A specific example: the clause might say "the buyer must notify the seller of any invoice dispute within 14 days, or the invoice is deemed accepted."