Contract Glossary
Payment Terms
Definition
The conditions under which payment is due, including amount, timing, method, and consequences for late payment. Common formats include Net 30 (payment due within 30 days of invoice), milestone-based payments, and payment on completion. Clear payment terms prevent the most common source of contract disputes.
In Practice
You deliver a $15,000 website redesign to a client. Your contract says 'Net 30' but doesn't specify when the 30 days start, from delivery? From the invoice date? From client approval? The client argues the clock starts after they sign off, which they delay for 6 weeks. Meanwhile, you're waiting 76 days for payment. A well-drafted payment terms clause would specify: 50% deposit before work begins, 25% at design approval, 25% upon delivery, with 'delivery' clearly defined and a late fee of 1.5% per month.
Common in these contract types
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