The Contractor Demand For Payment Letter is a crucial document in the Indian business environment, used when payments for contracted services remain outstanding beyond the agreed terms. This document becomes necessary when regular invoicing and payment follow-ups have been unsuccessful, serving as a formal step before initiating legal proceedings. It needs to comply with Indian contract law and should reference specific provisions from the Indian Contract Act, 1872, and if applicable, the MSME Development Act, 2006. The letter typically includes details of the original contract, completed work, outstanding amounts, and payment history, while setting clear deadlines for payment and outlining consequences of non-compliance. This document is particularly important in establishing a paper trail for potential legal action and demonstrating the contractor's professional approach to payment collection.
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1. Sender and Recipient Details: Full legal names and addresses of both parties, including the date and reference numbers
2. Contract Reference: Clear identification of the underlying contract or work order, including dates and reference numbers
3. Payment Due Details: Specific amount owed, including any applicable taxes, with breakdown if multiple invoices are involved
4. Work Completion Statement: Confirmation that contracted work was completed as per specifications
5. Payment Terms Reference: Reminder of the agreed payment terms from the original contract
6. Outstanding Payment Duration: Clear statement of how long the payment has been overdue
7. Demand Statement: Formal demand for payment, including the total amount and deadline
8. Payment Instructions: Bank account details and acceptable payment methods
9. Consequences Statement: Clear statement of intended actions if payment is not received by the specified deadline
1. Interest Calculation: Include when claiming interest on the overdue amount as per contract terms or applicable laws
2. Previous Communications: Reference to prior payment requests or relevant communications when multiple reminders have been sent
3. MSME Declaration: Include when the contractor is registered under MSME to invoke special protections under MSMED Act
4. Dispute Reference: Include if there are any disputed amounts, acknowledging and addressing them separately from undisputed amounts
5. Without Prejudice Statement: Include when preserving legal rights for future action
1. Invoice List: Detailed list of all outstanding invoices with dates, reference numbers, and amounts
2. Payment History: Record of any partial payments received and remaining balance
3. Work Completion Documents: Copies of work completion certificates or client acceptance documents
4. Contract Excerpts: Relevant sections from the original contract regarding payment terms and consequences of default
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