In the contract data the rate for interest on late payment is stated to be 1% per annum over base lending rate for the BoE.
Clause 51.2 states that interest is calculated at the rate stated in the Contract Data…of the delayed amount per complete week of the delay.
How do the words per annum affect the calculation of the interest?
Had the Contract Data not had this insertion, the calculation on a £ 30,000 payment for 10 weeks would have been £ 30k x 0.5% = £ 150 x 10 weeks = £ 1,500.
Given the insertion of the 1 % per annum rate ( and assuming BoE lending at 0.5% ) is the correct calculation :
- £ 30k x 1.5% x 10weeks = £ 4,500 or
- £ 30 x 1.5% = £750 x 10/52 = £ 86.54
Quite a difference !
Do the words ‘per complete week of delay’ in clause 51.2 apply to the rate stated in the Contract Data even though the CD rate uses the words ‘per annum’?