I have a question for my small business about past due invoices and rental space.

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I have a question for my small business about past due invoices and rental space.

I have a wholesale/restaurant that I provide a product to those to resell. I also do mobile food vending as well. One of my clients has agreed to a NET 30 term on invoices owed and I used space on their property during a 6 week season where I paid them 20% of my outside booth sales. Although I don’t remember signing a contract with them on this matter. They are now refusing to pay their invoices totaling $3,092. Based on the 20 for the outside booth sales we owe them 1,264. I have offered to offset the amount and accept payment for the difference but they refuse to do that, instead they want the $1264 in cash before they cut a check for the $3092. Now, mind you, all of their invoices are signed and now past due their payment terms. Is this allowed by them?

Asked on November 6, 2018 under Business Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

There is no inherent right (at least outside of litigation or a lawsuit; see below) to offset (though doing so is logical) unless there is an agreement saying that amounts owed to you may be offset against amounts owed by you, and vice versa. Without such an agremeent, amounts you owe them vs. amounts they owe you are separate and need to be resolved separately. So they could refuse to pay until you pay them--which raises the risk that they will take your money and NOT pay, forcing you to sue them for the money.  Your options are pay, then if they don't pay, sue them; or sue them now for the money, in which case they will presumably countersue for what you owe them. Oddly enough, *in the lawsuit* there is an ability to "set off" amounts due to one party from amounts they in turn owe the the other, but while this is possible in litigation, it is not possible outside of litigation without consent or agreement; thus, if you and they can't work matters out voluntarily, they can refuse to pay and force you to sue for the full amount.


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