7Meaning of payment term

7 Meaning of payment term

(1) Except in a case where subsection (2) applies, a payment term, for a payment, means the number of calendar days as mentioned in whichever one of the following paragraphs is relevant to the payment: (a) where a stated number of days, within which the payment is required to be made, is stated on an invoice—the stated number of days (converted to calendar days, where necessary); (b) where a period, within which the payment is required to be made, is stated on an invoice (other than a stated number of days)—the largest possible number of calendar days in the period (disregarding when the invoice was actually issued or received); (c) where a date for payment of an invoice is stated on the invoice and the invoice does not state a period within which the payment is required—the number of calendar days between date the invoice was issued and the date for payment of the invoice; (d) where a payment is made without an invoice, but in response to a notice for payment under an agreement—the number of calendar days as set out in paragraph (a), (b) or (c) (as is relevant) worked out as if the notice were an invoice; (e) where a payment is made without an invoice or a notice for payment—the number of calendar days between the date the obligation to make the payment arises under an agreement and the date the obligation is to be fully discharged by the payment under the agreement.

Note: Example: In relation to paragraph (b), a payment made in relation to an invoice:

(a) requiring payment ‘by the end of the month’ would have a payment term of 31 calendar days; and
(b) requiring payment ‘by the end of next month’ would have a payment term of 62 calendar days; and
(c) requiring payment ‘by the end of the next week’ would have a payment term of 14 calendar days; and
(d) requiring payment ‘by the longer of 14 days and the end of the month’ would have a payment term of 31 calendar days.

(2) Where: (a) the term for a payment is set out as an express term in a written contract; and (b) under subsection (1), the payment term, for the payment, is different to the outcome that would result from applying the relevant term of the contract; then despite subsection (1), the payment term, for the payment is to be determined in accordance with the relevant term of the contract. (3) When converting a number of non-calendar days into calendar days, choose the method that would result in the largest possible number of calendar days.

Note: Example: 5 business days would be converted to 7 calendar days.

(4) Where an invoice or notice contains an error making it difficult to ascertain a single payment term under subsection (1), the payment term, for the affected payment, is payment term with the largest number of calendar days.