Short Reads

Ongoing commercial transactions entered into before 1 July 2017 now subject to new 60 day payment term limit

Ongoing commercial transactions entered into before 1 July 2017 now s

Ongoing commercial transactions entered into before 1 July 2017 now subject to new 60 day payment term limit

11.07.2018

Sixteen years ago, a provision on statutory interest in commercial agreements was introduced in article 6:119a Dutch Civil Code (DCC) to first implement Directive 2000/35/EC and subsequently Directive 2011/7/EU.

1.      Background: Statutory commercial interest

Sixteen years ago, a provision on statutory interest in commercial agreements was introduced in article 6:119a Dutch Civil Code (DCC) to first implement Directive 2000/35/EC and subsequently Directive 2011/7/EU.

These Directives were introduced to ensure compliance and prevent payment delays in commercial transactions. If a party to a commercial transaction exceeds a payment term, it can be held liable for statutory commercial interest. In accordance with Directive 2011/7/EU, article 6:119a DCC limits the payment term in commercial transactions to a maximum of 60 days, unless the parties explicitly agreed a longer term that could not be considered 'grossly unfair'.

This criterion did not offer small companies (SMEs) protection from long payment terms though. Instead, large companies tended to use their negotiating power to convince SMEs to agree to longer payment terms. This was considered undesirable because long payment terms may cause liquidity problems and sometimes even bankruptcy.

2.      Legislation against unreasonably long payment terms

In light of the undesirable effects outlined above, new legislation against unreasonably long payment terms was introduced. As a result, the vague criterion of 'grossly unfair' in paragraph 5 in article 6:119a  DCC has been replaced by paragraph 5, which contains an absolute criterion for a particular group of commercial transactions (see our previous blog "Act against unreasonably long payment effective as of 1 July 2017").

For a particular group of commercial transactions, instead of the vague criterion of 'grossly unfair' in article 6:119a paragraph 6 DCC, the Act introduces an absolute criterion.

A large company that enters into a commercial transaction with an SME and acts as a creditor is not entitled to stipulate a payment term that exceeds 60 days. In addition, any payment term imposed by a large company that exceeds 60 days will be considered void. In such circumstances, the statutory term in article 6:119a paragraph 2 DCC will apply as follows:

  1. the large company is automatically obliged to pay within 30 days; and
  2. if the large company does not pay within this 30 days term, the SME can claim statutory commercial interest. This interest will start to accrue after these 30 days have elapsed.

This legislative change was implemented on 1 July 2017. All commercial transactions concluded on or after that date had to comply with the new rule and could therefore no longer include a payment term exceeding 60 days.

3.      Transitional arrangement ended 1 July 2018

The new legislation includes a transitional arrangement for commercial transactions already in place on 1 July 2017, such as continuing performance contracts [duurovereenkomsten]. These commercial transactions are subject to the new 60 day limit from 1 July 2018 onwards.

Large companies with commercial transactions already in place on 1 July 2017 that include payment terms exceeding 60 days should therefore be aware that these payment terms are void as of 1 July 2018. By operation of law, a payment term of 30 days will apply instead.

4.      Qualification as commercial transaction

If a contract qualifies as a commercial transaction, there are other factors to consider besides the duration of the payment term. For example, the difference between statutory commercial interest at 8% and regular statutory interest at 2% will also have a significant impact.

Consequently, there are more and more cases in which the debtor disputes the qualification of a contract as a commercial transaction. For instance, an appeal has recently been lodged at the Supreme Court on whether a loan agreement qualifies as commercial transaction.

In his conclusion of 18 May 2018 ECLI:NL:PHR:2018:513, which precedes the decision of the Supreme Court, the Advocate General Hartlief agreed with the Court of Appeal that a loan agreement qualified as a commercial transaction and therefore commercial interest applied to overdue interest payments. The Supreme Court is expected to render its decision soon.

Team

Related news

20.11.2018 NL law
Seminar 'Personal data from a broader perspective: overlap inside and outside the privacy domain'

Seminar - On 20 November 2018, Stibbe will host a seminar on privacy. Several Stibbe lawyers will discuss personal data from a broader perspective and the overlap that can occur inside and outside the legal privacy domain.

Read more

14.11.2018 NL law
Totstandkoming StAB-verslag niet in strijd met artikel 6 EVRM

Short Reads - De totstandkoming van deskundigenberichten van de StAB is niet in strijd met het in artikel 6 EVRM gewaarborgde recht op een eerlijk proces, zo oordeelde de Afdeling bestuursrechtspraak van de Raad van State (Afdeling) in haar uitspraak van 17 oktober 2018. De Afdeling komt tot dit oordeel na een uitgebreide behandeling van de wijze waarop deskundigenberichten van de Stichting Advisering Bestuursrechtspraak voor Milieu en Ruimtelijke Ordening (StAB) tot stand komen.

Read more

16.11.2018 NL law
Tax Alert: Adoption 2019 Tax Plan and ATAD 1 proposal by the Dutch Lower House of Parliament

Short Reads - Further to the several tax proposals released by the Dutch government on Budget Day last September (the 'Proposals' –  see also our Tax Alerts of 20 September 2018 and 16 October 2018), on 15 November 2018 the Lower House of Parliament has adopted the 2019 Tax Plan and the proposed implementation of the Anti-tax Avoidance Directive ('ATAD 1') per 1 January 2019. In this Tax Alert we will provide you with a short update in respect of the Proposals.

Read more

14.11.2018 NL law
Het Europese PAS-arrest: een programmatische aanpak is toelaatbaar, maar PAS op!

Short Reads - Op 7 november 2018 heeft het Europese Hof van Justitie de prejudiciële vragen van de Afdeling bestuursrechtspraak beantwoord over de toelaatbaarheid onder de Habitatrichtlijn van het Programma Aanpak Stikstof. De eerste reacties op dit arrest bevatten twijfels over de houdbaarheid van het PAS: het houden van vee wordt moelijker en PAS-vergunningen kunnen niet worden verleend of moeten worden ingetrokken.

Read more

Our website uses cookies: third party analytics cookies to best adapt our website to your needs & cookies to enable social media functionalities. For more information on the use of cookies, please check our Privacy and Cookie Policy. Please note that you can change your cookie opt-ins at any time via your browser settings.

Privacy – en cookieverklaring