Page 12 - John Hundley 2010

Agreement Before The Fact Is Important.

Ordinarily, to be a part of the contract, agreement on a point must occur when
or before the deal is made. This can be problematic for businesses like our feed
seller who only gives the documents to the purchaser after the deal is made. But
even then, including provisions on attorney fees and interest can be valuable.
This is so because, while the buyer can claim he or she did not know of those
provisions (and hence did not agree to them) the first time he or she did business
with the seller, the buyer can be charged with notice of the seller’s terms, and
hence with agreement to those terms, when he or she gives the seller repeat
business. Sharp

Accordingly, those who do business without there being written contracts in advance are wise to
insert language into their invoices or receipts clearly indicating that payment is required promptly and
providing notice of the terms on late payment and legal fees. Lawyers who draft these documents
regularly insert this language, as do many companies which supply standard form contracts. If your
business sells goods or services on open account you should review your documents to be sure you are
taking advantage of these provisions to aid in enforcement of your accounts receivable.
Consumers Beware.

Consumers should be aware that courts generally will enforce contracts that allow for recovery of
reasonable attorneys’ fees and interest. The consumer should not enter into “buy now, pay later”
contracts unless they are sure they can comply with the terms because failure to do so will add interest
and attorneys’ fees which will make the original credit purchase very costly.

Similarly, buyers should read the “fine print” on sellers’ acknowledgements of order,
delivery tickets and the like before giving the seller repeat business. Usually you will not
want to choose a poor supplier with poor or no documentation over a good supplier with
enforceable clauses on attorney fees and prejudgment interest, but you should be aware
of such clauses before you enter into contracts you may be unable to keep.
Merchants Beware Also.

Merchants should be alert to such documents also. Under Illinois’ version of the Uniform Commercial
Code on sales of goods (810 ILCS 5 Article 2), an “expression of acceptance or a written confirmation
which is sent within a reasonable time operates as an acceptance even though it states terms additional
to or different from those offered or agreed upon, unless acceptance is expressly made conditional on
assent to the additional or different terms” (emphasis added). Moreover, between merchants such terms
become part of the contract unless (a) the purchaser’s offer expressly limited acceptance to the terms of
the offer; (b) such terms “materially alter” the offer; or (c) notification of objection has been or is given
within a reasonable time after notice of the additional or different terms is received. § 2-207. Accordingly,
the chance that clauses providing for payment of prejudgment interest and attorney fees upon breach will
be held to be part of the contract is even greater in transactions between merchants than in transactions
between consumers, or between a merchant and a consumer.
John\SharpThinking\#33.doc.

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