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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10629
Experience:  30 years of corporate, litigation and international law
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Question about late fee interest

Resolved Question:

Hi, I am having a dispute with a service provider who was supposed to market my iPhone app. The contract is worth $6000 and I have made half the payment, I do not want to pay the reast as I believe he has breached our contract. He threatens that if I do not pay the second payment then there will be a high late fee. In our contract this is mentioned about late fees: "10% of unpaid amount will be charged as late fee if the remaining fee is not paid in full within 5 days after the promotion. The late fee will accrue at a rate of 5% every 15 days up to the maximum legal rate.

The company is based in California so I guess California law applies here. Is the late fee as described legal, and if it is what is the maximum legal rate the contract mentions?

And I'm not sure what exactly this means: "The late fee will accrue at a rate of 5% every 15 days" Can someone explain?
Submitted: 6 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 6 years ago.
What does the contract say about whose law applies? Where are you located? Where was the contract signed? Where was the contract to be performed?
Customer: replied 6 years ago.
What does the contract say about whose law applies?
It doesn't, there is only the adress of the company in the upper right corner. They are located in California.

Where are you located?
I am located in Norway

Where was the contract signed?

They sent me a signed contract by email, I don't know where they signed it. I signed the contract in Norway, then I scanned it and sent it back to them.

Where was the contract to be performed?

On the Internet? You can read the contract here:
Expert:  Richard - Bizlaw replied 6 years ago.

I suggest that you bring your suit in Norway. The contract was not formed until you signed it in Norway so you can take the position the contract was created there. I do not know Norwegian law on resolving conflicts of law but I would think you have a good chance of successfully arguing that Norwegian law applies and not CA law.

Under CA law, there late fee may be illegal is it bears no relationship to the administrative cost of being late. There is also a doctrine that some things are punitive in nature which could make both the late fee and the proposed 5% every 15 days unenforceable. It may also violate the CA usury law (usury is a pretty complex area in the US as it can depend on the nature of the business in which you are engaged.

BotXXXXX XXXXXne, file suit in Norway before they can file suit in CA and that will change the dynamic of your discussions with the other side.

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