If a customer were to not pay timely what would be the interest calculation? Is it compounded? I saw prome plus 1% but how is it calculated and is there a stautute that expresses it?
2 replies
Feb 21, 2020
New Jersey prompt payment law requires that "[i]f a payment due pursuant to the provisions of this section is not made in a timely manner, the delinquent party shall be liable for the amount of money owed under the contract, plus interest at a rate equal to the prime rate plus 1%." New Jersey specifically define the prime rate as "the base rate on corporate loans at large United States money center commercial banks."
The period for which the interest is calculated is "the period beginning on the day after the required payment date and ending on the day on which the check for payment has been drawn." Note, however that the interest is not awarded for transportation projects.
The statute governing prompt payment and the interest award for late payment in New Jersey is 2A:30A-2.
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Jul 8, 2022
I'm trying to find the answer to this question as well. Is there daily compounding? And are we using the prime rate in effect on the first day of the interest accrual period or calculating using the different prime rates each day of the interest accrual period?