Q&As

In a B2B supply of services agreement (which is unregulated), if a customer inadvertently overpays an invoice is there a legal obligation on the supplier to pro-actively seek to return the overpayment?

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Published on LexisPSL on 04/09/2017

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • In a B2B supply of services agreement (which is unregulated), if a customer inadvertently overpays an invoice is there a legal obligation on the supplier to pro-actively seek to return the overpayment?
  • Civil and criminal consequences
  • Duties of the supplier and retention of the monies
  • Contractual obligations
  • Implied term of Good faith
  • Set-off

Civil and criminal consequences

Any overpaid money legally belongs to the payer. If the supplier is aware of the overpayment and deliberately fails to inform the customer there are potential criminal and civil consequences.

The retention of the monies could amount to theft within the meaning of sections 1–6 of the Theft Act 1968 (TA 1968) (the dishonest appropriation of property belonging to another with the intention of permanently depriving the other of it). See Practice Note: Theft. Under TA 1968, s 3 ‘appropriation’ for these purposes includes coming by property (which includes money under TA 1968, s 4), whether innocently or not without stealing it and later keeping it. Dishonesty would have to be proved within the meaning of the test set out in R v Ghosh. The test is twofold (i) is the supplier dishonest by the standards of ordinary and decent people (an objective standard) and (ii) does the supplier theirself realise they are being dishonest by those standards (a subjective standard)? Concealing an overpayment would in all probability amount to dishonesty.

The money could be recoverable in a civil action for money had and received. This is a restitutionary claim: see Practice Note: Restitution for unjust enrichment—elements of the claim. The essential elements of the claim are that the customer has paid an ascertained sum of money to the supplier who has been

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