Disputed charges clause: Overview, definition and example
What is a disputed charges clause?
A disputed charges clause is a provision in a contract that outlines the process for handling disagreements about charges or payments. It specifies how either party should address issues when one party disputes the amount owed or believes there has been an error in the billing or payment process. This clause often includes steps for notification, investigation, and resolution of the dispute.
Why is a disputed charges clause important?
A disputed charges clause is important because it helps prevent misunderstandings and conflicts related to financial obligations in a contract. It provides a clear procedure for addressing billing discrepancies and ensures that both parties have a formal process to follow. This can save time, reduce tension, and maintain the integrity of the business relationship by preventing disputes from escalating.
Understanding disputed charges clause through an example
Imagine a business hires a contractor for a project and receives an invoice for $10,000. After reviewing the invoice, the business notices a charge for services that were not rendered. The disputed charges clause in the contract would outline the process for disputing this charge, such as notifying the contractor within a set period (e.g., 10 days), providing supporting documentation, and allowing both parties to resolve the issue before proceeding with payment.
In another case, a service provider sends an invoice that the client believes contains incorrect fees. The disputed charges clause would specify how the client should formally dispute the charge and what actions the service provider must take to investigate and resolve the issue.
Example of a disputed charges clause
Here’s how a disputed charges clause might look in a contract:
“In the event of a dispute regarding any charges or fees, the party disputing the charges must notify the other party in writing within 15 days of receiving the invoice. Both parties agree to work together in good faith to resolve the dispute promptly. Payment of the disputed charges shall be withheld until a resolution is reached.”
Conclusion
A disputed charges clause provides a clear and structured process for resolving disagreements over charges in a contract. It helps maintain transparency and fairness between the parties, ensuring that any billing issues are addressed promptly and professionally. Understanding and including this clause in contracts can prevent conflicts and ensure smoother business relationships.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.