Glossary · Legal and regulation
Prejudgment interest
Prejudgment interest is interest a court awards on a debt for the period between when it was due and when judgment is given.
When you sue for an unpaid invoice, the court can add interest for the time you were kept out of your money before the judgment. After judgment, a separate post-judgment interest rate usually applies until the debt is paid.
In the US, prejudgment interest on contract debts is mostly governed by state law, often at the state’s legal rate unless the contract sets one. In England and Wales, a claimant can claim statutory interest under the Late Payment Act or ask for discretionary interest under the County Courts Act or Senior Courts Act.
Claim interest in the original claim form. A court generally won’t award interest that wasn’t asked for.
Example
A US supplier sues for a $15,000 invoice that is 10 months overdue, in a state with a 9% legal rate and a contract silent on interest. The judgment includes about $1,125 of prejudgment interest ($15,000 × 9% × 10/12).