In our newsletter "Bill on maximum period of payment" of 22 November 2012, we described a new bill imposing, among other things, a ceiling on the length of payment periods. The bill was finally enacted by the Danish Folketing on 11 December 2012. The Act contains amendments compared to the bill introduced initially which formed the basis for the aforesaid newsletter.
We described the original bill in our newsletter of 22 November 2012, which you can find here. The bill implied, among other things, that traders and public authorities are generally no longer free to agree on the length of the period allowed for payment. In addition, the interest rate payable in case of late payment (default interest) is increased, and the parties' access to agreeing on the right to interest for late payment is limited. With the exception of the interest rate increase, the rules do not apply to agreements between consumers and traders. The enactment by the Danish Folketing resulted in a few amendments, which will be described below.
Payment periods in contracts between two traders
The bill proposed that two traders should be allowed to agree on a period of payment of up to a maximum of 60 days. In the final Act the maximum has been reduced to 30 days. The reason for the reduction is that a majority of the Folketing feared that the new Act would unintentionally make the 60-day period the normal payment period in trade relationships instead of the current 30 days.
The exception to the new ceiling on payment periods which was described in the previous newsletter is still applicable.
Effective date
The Act will take effect on 1 March 2013. The effective date is the same as suggested in the bill. The provisions of the Act on payment periods basically do not apply to agreements entered into prior to 1 March 2013. However, the provisions of the Act on the new interest rate and compensatory amounts apply also to agreements entered into before 1 March 2013 if the creditor claim becomes due for payment after that date.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
