Written by Admin | Aug 5, 2024 6:56:03 PM
Introduction
If a debtor is late in paying a sum of money, he owes statutory interest. There are two types of statutory interest: First, Art. 6:119 BW, which deals with statutory interest with respect to non-trade agreements (transactions involving a consumer). Second, there is the commercial interest of Art. 6:119a (1) BW. According to Art. 6:119a paragraph 1 BW, a "commercial agreement" means the agreement for benefit which obliges one or more of the parties to give or do something and which is concluded between one or more natural persons acting in the exercise of a profession or business, or legal persons.
"Trade interest" broad concept
From a recent
ruling by the highest civil court, the Supreme Court shows that the term "commercial agreement" should be interpreted broadly. The Supreme Court points out that Art. 6:119a DCC was introduced to implement Directive 2000/35/EC (now: Directive 2011/7/EU4) on combating late payment in "commercial transactions." "Commercial transactions" are, according to Art. 2 (1) Directive 2011/7/EU, transactions between undertakings or between undertakings and public authorities that lead to the delivery of goods or the provision of services for remuneration. The case presented to the Supreme Court concerns the financial consequences of a number of dairy farmers (members) leaving a dairy cooperative, DOC Kaas. According to the Supreme Court, pursuant to case law of the Court of Justice of the European Union, the concept of 'commercial transactions' must be interpreted broadly and does not necessarily coincide with the concept of 'contract'. For a transaction to qualify as a commercial transaction, it must have been carried out between undertakings or between undertakings and public authorities and the transaction must result in the supply of goods or services for consideration. The court ruled that some of the dairy farmers' claims relate to milk money, and thus to payment for the milk delivered by the dairy farmers (natural persons acting in the exercise of a profession or business, or legal persons) to DOC Kaas (a cooperative) under the supply agreements. According to the Supreme Court, the court's opinion that there is a commercial agreement and statutory commercial interest is due is correct. DOC Kaas' argument that the way in which a cooperative and its members compensate for delivered milk in their mutual (special) relationship is primarily regulated in the membership sphere within the cooperative - in this case by the Articles of Association and the Internal Regulations - and that the delivery agreements play only a limited supplementary role is not correct.
High statutory interest
The level of statutory interest rates is set for six months at a time. Most recently, it was set on Jan. 1, 2024. The interest rate for trade agreements (currently: 12.5%) is considerably higher than that for non-trade agreements (currently: 7%).
When trade interest?
The Supreme Court has previously ruled that trade interest relates only to the monetary consideration for goods or services delivered under a trade contract. Thus, this refers only to the primary payment obligation under the commercial agreement, for example, the purchase price or agreed fee for a service rendered. According to the Supreme Court, commercial interest does not cover other monetary obligations to which the commercial agreement may give rise. Thus, commercial interest is not payable on damages (due to dissolution of a commercial contract) for breach of contract, not even on extrajudicial costs or on the purchase price that has to be repaid as a result of the annulment of the commercial contract (in that case a purchase agreement) due to error (of in that case the buyer).
Contractual freedom
If there is no contractually stipulated interest rate, the "ordinary" legal interest rate or the commercial interest rate applies. In B2B relationships, parties are in principle free to deviate from the statutory interest rates and agree on a different interest rate.
Advice for practice
The debtor (e.g. the client, distributor or buyer) is often unaware that in case of commercial contracts in case of - no - deviating contractual regulation (in the agreement or the applicable general terms and conditions) the - significantly higher - commercial interest rate may apply. In a B2B relationship, parties are free to deviate both upward and downward from the legal regulation on statutory (commercial) interest rates, and, for example, agree whether statutory interest or commercial interest is due. Record this clearly.
If you have any questions as a result of this blog or have other questions, please feel free to contact Marc Janssen or any of the other members of the sections Business Law - M&A and/or Procedures & Dispute Resolution.