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Don’t Forget Interest on Your Judgment in Your Contracts


When you file a lawsuit against another business, that lawsuit may take some time before it finally resolves. When it does, and you get whatever damages you are entitled to, you may be asking whether you will also be paid for the time that it took for you to actually litigate and try the case.

Prejudgment Interest

The answer is yes, that you do get interest on your money that you had to sue to recover. This is called prejudgment interest. Prejudgement interest is yours as a matter of right—the law says that you are entitled to interest. It is calculated from the date of the injury (the breach of the agreement) to the date of the judgment or verdict.

If your contract is silent as to interest, you are capped at the amount of prejudgment interest that the law says that you can charge. That amount can change, but generally is between 4-6%. But just because that is the default interest rate doesn’t mean that’s all the prejudgment interest that you can recover. Up to a maximum amount of 18%, you can charge whatever interest that you want to specify in your contract.

A simple statement in your contracts that you will be entitled to prejudgment interest at the highest interest rate allowable will suffice to allow you to exceed the statutory percentage.

This simple provision can equate to a lot of money. On a $100,000 judgment, at a rate of 4.5%, you would recover a total of $104,500. But at the maximum allowable interest rate of 18%, that amount would end up as $118,000 in one year. This is a significant difference.

PostJudgment Interest

You can also get post judgment interest, which is interest that accrues from the time the judgment is entered to whenever the judgment is paid. Like prejudgment interest, post judgment interest is adjusted quarterly, but generally stands at between 4-6%, but parties can also increase that amount in their agreements.

Importantly, post judgment interest can accrue on the accrued prejudgment interest, making it all the more important to specify maximum prejudgment interest in your contracts.

Standard Contracts May Be Insufficient

Many contrats completely overlook interest on a judgment, whether that is pre or post judgment. Many standard contracts found online also do not address this issue. But as you can see, compounding the maximum post judgment interest on the maximum prejudgment interest can exponentially increase the value of your case, and the damages that you stand to win at trial.

The threat of maximum interest can also help the other side come to the bargaining table, and can serve as a threat to compel the other side to come to a reasonable settlement with you.

Getting legal help now can maximize your damages in a lawsuit later on. Call the West Palm Beach business litigation lawyers at Pike & Lustig for help today.



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