[koolba]

I’m pretty sure that violates most State usury laws.

Note that I’m not referring to charging interest for late payment as being illegal. I’m specifically referring to charging 10% compounded weekly, which comes out about 14200% annualized.

[tptacek]

Probably not. Even in states that don't exclude fees unrelated to an actual loan of money, it looks like contracted late fees between businesses are excluded from usury definitions (that's the case in NY, for instance).

[newman8r]

I'm curious if there's any examples of this ever happening. Some company keeps ignoring a contractor's requests for a couple of years and ends up owing ~$20 million on a thousand dollar debt.

But like you, I'm pretty skeptical. Probably wouldn't hold up in court.

[TheOtherHobbes]

The outcome would be entirely random - dependent on the inclination of the judges.

A sensible business would settle out of court with a very low offer. A sensible contractor would accept the offer.

But generally this is another example of corporate privilege.

In reality, late payments kill many small businesses. In a political system that was genuinely friendly to the small guy, fines for late payment would be mandatory.

[koolba]

All my contracts that include such an interest clause also include language to the effect of “the lesser of X or the maximum allowed by law”.