Search
Contact
02.09.2016 | KPMG Law Insights

Corporate Law, Company Law – Act to Combat Late Payment in Business Transactions

Act to Combat Late Payments in Business Transactions

On July 29, 2014, the Act on Combating Late Payments in Business Transactions came into force. The aim of the law is to improve the payment practices of private companies and public-sector clients in order to strengthen the liquidity and competitiveness of market players. The new legal regulations require a timely review and adjustment of general terms and conditions and individual contractual agreements.

The Act to Combat Late Payments in Business Transactions contains significant new regulations that considerably restrict contractual autonomy. Payment, inspection and acceptance deadlines can no longer be agreed at will. In addition, the statutory default interest rate was increased and a flat rate for default damages was introduced.

Maximum limits for payment, inspection and acceptance deadlines

Individual contractual agreements that provide for a longer payment period than 60 days after receipt of the consideration, or the subsequent receipt of an invoice or equivalent payment schedule, are invalid. Something else can only be considered if the parties have expressly agreed on the longer payment period and this appears reasonable to the creditor.

If a claim for payment is to be fulfilled only after verification or acceptance of the consideration, an individual contractual agreement shall only be effective if it has been expressly made and is justified with regard to the interests of the creditor.

Payment periods in the general terms and conditions

Stricter standards apply to the agreement of payment periods in the general terms and conditions: Accordingly, an agreement by which the user reserves an “unreasonably long time” for the fulfillment of a payment claim is already invalid. If the user is not a consumer, it must be assumed in case of doubt that a period of more than 30 days is unreasonably long.

The same applies if the user of GTCs reserves the right to fulfill a claim for payment of the contractual partner only after an “unreasonably long period of time”. If the user is not a consumer, a period of more than 15 days after receipt is already unreasonably long.

Special rules apply to public-sector customers: In principle, they may only allow payment periods of a maximum of 30 days after receipt under individual contracts. Longer periods are only effective if the agreement has been expressly made and is objectively justified. The maximum permissible period is 60 days – this maximum limit cannot be replaced.

Increase of the default interest rate

The default interest rate for legal transactions not involving a consumer has been increased from the original eight to nine percentage points above the prime rate.

An agreement made in advance in business transactions, according to which the claim for payment of interest on arrears is completely excluded, is invalid. A limitation of the claim for default interest shall only be invalid if it is unreasonable for the creditor.

Liquidated damages

If the debtor is in default of payment, the creditor is entitled to reimbursement of the so-called recovery costs. What is new is that the creditor is now entitled to payment of a lump sum of EUR 40. The claim to this arises irrespective of whether and in what amount the creditor has suffered damage. Consumers may not be debtors but may be creditors of this claim.

An agreement made between the parties which excludes or limits the creditor’s claim to the lump sum shall also be invalid if it appears unreasonable for the creditor. The agreement of the complete exclusion of the lump sum or the reimbursement of the legal costs shall be considered as not justified in case of doubt. These provisions do not apply if a consumer is the debtor of the claim.

The new regulations only apply to contractual obligations entered into after July 28, 2014. An exception applies to continuing obligations. If the consideration under a continuing obligation is not provided until after June 30, 2016, the new provisions also apply if the continuing obligation existed before the Act came into force.

Consequences for debtors

If contractually agreed provisions on the obligation to pay, inspect or accept are invalid due to infringement of the new provisions, this may have adverse consequences for the debtor: If, for example, an agreed payment deadline is invalid, the statutory provisions shall apply. The service owed shall then become due immediately. If the transaction is a commercial transaction, the creditor is entitled to interest on the due date at a rate of 5%.

In addition, a claim for payment of default interest in the amount of 9% shall arise within 30 days after the due date and receipt of the invoice. Upon the occurrence of the default in payment, the creditor shall then also be entitled to payment of the newly introduced lump sum in the amount of EUR 40.00, namely on account of each installment payment or other installment payment with which the debtor is in default.

Finally, in the event of a violation of the new regulations, warnings and injunctions may generally be threatened. Individual contractual provisions and general terms and conditions, in particular general terms and conditions of purchase, which fall under the scope of the new regulations should therefore be reviewed promptly and adapted if necessary.

Explore #more

24.03.2025 | KPMG Law Insights

Product piracy in online retail: these are the latest tricks

Product piracy is also flourishing with the growth in online trade. A major problem for brand owners, but also a challenge for online marketplaces and…

24.03.2025 | Deal Notifications

KPMG Law advises Munich Airport on the sale of aerogate München Gesellschaft für Luftverkehrsabfertigungen mbH

KPMG Law Rechtsanwaltsgesellschaft mbH (KPMG Law) provided legal advice to Flughafen München GmbH (FMG) on the sale of its subsidiary aerogate München Gesellschaft für Luftverkehrsabfertigungen…

21.03.2025 | KPMG Law Insights

Special infrastructure assets: how the administration manages to implement projects quickly

The special infrastructure fund creates the opportunity to catch up on years of investment backlog. There is a need for urgency. Defence capability, economic growth…

20.03.2025 | KPMG Law Insights

AI Act: This applies to AI in universities and research

Artificial intelligence (AI) offers numerous opportunities for research, teaching and administration, but also raises complex legal issues. The European Union’s AI Regulation(AI Act)…

19.03.2025 | In the media

BUJ/KPMG Law Summit Transformation

The Bundesverband der Unternehmensjuristinnen und Unternehmensjuristen e.V. (BUJ) and KPMG Law cordially invite you to the BUJ Summit Transformation on May 28, 2025 in Frankfurt…

18.03.2025 | In the media

KPMG Law Statement in the German transport magazine DVZ: Planning at a crawl; DIHK sees great potential for faster traffic route construction

The Chamber of Commerce in Arnsberg regularly awards prizes to the worst state roads in the Hellweg-Sauerland region of Westphalia. A funny idea, if it…

13.03.2025 | KPMG Law Insights

ECJ tightens antitrust liability for information exchange

The ECJ (C-298/22) has recently set strict standards for the permissible exchange of information between companies. As a result, companies are now even more faced…

11.03.2025 | In the media

KPMG Law Interview with HAUFE: LkSG after the elections – everything new?

Many companies have made considerable efforts to implement the Supply Chain Due Diligence Act. The political discussion about its abolition is now causing uncertainty. KPMG…

07.03.2025 | In the media

Guest article in unternehmensjurist: Implementing the requirements of the BFSG correctly

The Barrier-Free Accessibility Reinforcement Act requires companies to offer certain products and services without barriers. The obligations vary depending on the role in business transactions.…

05.03.2025 | In the media

KPMG Law Statement in TextilWirtschaft: What the changes from Brussels mean for the fashion industry

It’s now official: the EU Commission will massively simplify the planned sustainability reporting. The Supply Chain Law Initiative examines the announced changes to the CSDDD…

Contact

Dr. Konstantin von Busekist

Managing Partner
Head of Global Compliance Practice
KPMG Law EMA Leader

Tersteegenstraße 19-23
40474 Düsseldorf

Tel.: +49 211 4155597123
kvonbusekist@kpmg-law.com

© 2024 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a public limited company under German law and a member of the global KPMG organisation of independent member firms affiliated with KPMG International Limited, a Private English Company Limited by Guarantee. All rights reserved. For more details on the structure of KPMG’s global organisation, please visit https://home.kpmg/governance.

 KPMG International does not provide services to clients. No member firm is authorised to bind or contract KPMG International or any other member firm to any third party, just as KPMG International is not authorised to bind or contract any other member firm.

Scroll