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Last edited 04 Jan 2018
Payment is the transfer between parties of some form of value (such as funds, services, assets) in an agreed exchange. This can be for goods, services or to fulfil a legal obligation such as a debt. The most common form of payment involves money although it can also take the form of stock issues or other benefit, and is typically preceded by a bill or invoice specifying the amount due.
The payee (party being paid) generally has the right to specify the method of payment they will accept from the payer (party that is paying). Unless the parties agree otherwise, the payment is usually made in the currency local to the payee. An additional foreign exchange transaction will often be included as a surcharge if payment is made in another currency, if the payment is late, or if certain credit cards are used, etc. The payee can decide that they will accept a part/discounted payment in exchange for certain conditions, i.e. a cash payment, prompt payment, and so on.
By accepting a payment, the payee extinguishes the debt or other obligation that was owed to them by the payer, and usually acknowledges the payment by issuing a receipt. While they can refuse payment in some circumstances (such as outside banking hours), generally a payee cannot unreasonably refuse acceptance of a payment.
The Housing Grants, Construction and Regeneration Act 1996 includes provisions to ensure that payments are made promptly throughout the supply chain. Interestingly, the Act does not stipulate payment periods, simply providing that parties are free to agree what payments are due and when, i.e. the contract must set out an adequate mechanism for determining these matters. In default, the Scheme for Construction Contracts applies providing a payment period of 17 days from the due date to the final date for payment.
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