What Does “In Arrears” Mean in a Contract?
Payment made after services are rendered or a period has passed, rather than in advance.
Detailed Explanation
Payment "in arrears" means paying after the fact - you pay for last month's services this month. This contrasts with payment "in advance," where you pay before receiving services.
In arrears payment favors the paying party (they receive value before paying) while in advance payment favors the service provider (they get paid before delivering). Most employment and contractor arrangements pay in arrears.
Example in a Contract
“Consultant fees shall be paid monthly in arrears, within fifteen (15) days following the end of each calendar month.”
Why It Matters
"In arrears" means you work first, then get paid. This creates some risk - if the other party doesn't pay, you've already delivered. Understand whether you're paid in arrears or in advance.
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