EU Proposes to Tackle Late Payment

Posted: 9th May 2011

Euros

Late payment is a persistent problem for many traders and legislation to tackle the problem has been largely ineffective thus far.
To combat the problem, the European Parliament recently published a Directive aimed at reducing the problem in ‘business-to-business’ transactions. At the moment, the necessary transposition into national law is scheduled for 2013.
The Directive proposes that in normal circumstances:
  • ‘provision should be made for business-to-business contractual payment periods to be limited, as a general rule, to 60 calendar days…’ (para 13);
  • statutory interest due for late payment should be calculated on a daily basis as simple interest (para 15);
  • a creditor should be allowed to resort to charging interest for late payment without giving any prior notice of non-performance or giving other similar notice reminding the debtor of his obligation to pay (para 16);
  • creditors should be able to claim compensation for recovery costs, including administrative costs connected with late payment (paras 19 and 20); and
  • the abuse of freedom of contract to the disadvantage of the creditor should be prohibited.
There are numerous more detailed provisions.