Overview

The rules on when interest can be charged on commercial debts paid late may be changing.

Back in Spring 2009, the European Commission started the process of revising the European Directive which led to the Late Payment of Commercial Debts Act 2002. It felt that the Directive had not made a big enough impact on ensuring prompt payment.

The European Parliament has released the result of its negotiations about the new legislation, with a proposed standard maximum 30-day credit period in both the public and the private sector that will restrict the ability of customers and suppliers to agree different terms, as is currently allowed.

The new draft is expected to go before the European Parliament plenary session in October, but in the meantime, this briefing from Birmingham-based Wragge & Co assesses how best to draft interest provisions within the Act as it stands, and what the position is if one doesn't include anything.