Law on the Prevention of Late Payment in Commercial Transactions


Published: 2003-09-12

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official translation
REPUBLIC OF LITHUANIA
LAW ON THE PREVENTION OF LATE PAYMENT IN
COMMERCIAL TRANSACTIONS
 
9 December 2003 No. IX-1873
Vilnius
 
 
Article 1. Purpose of the Law
1. The purpose of the Law is to regulate interest on late payments for the goods sold, services provided and works carried out as well as to establish the rights of creditors in case of late payment.
2. This Law applies to all payments made as remuneration for commercial transactions concluded between economic entities or between economic entities and public authorities which lead to the delivery of goods, provision of services or performance of works  for remuneration and in which payments are made.
3. This Law does not regulate:
1) transactions with consumers purchasing goods, services or works for meeting their personal, family or household needs not related to business or profession;
2) interest in connection with payment under the Law of the Republic of Lithuania on Bills of Exchange and Law of the Republic of Lithuania on Cheques;
3) interest in connection with payments made as compensation for damages, including payments from insurance companies;
4) payments where bankruptcy or restructuring proceedings have been instituted against the debtor;
5) claims for interest below LTL 20. 
4. The provisions of this Law have been harmonised with the legal acts of the European Union indicated in the Annex to this Law.
 
Article 2. Definitions
For the purpose of this Las:
1. "commercial transactions" means transactions between economic entities or between economic entities and public authorities which lead to the delivery of goods or the provision of services or  the performance of works for remuneration,
2. "retention of title" means the contractual agreement according to which the seller retains title to the goods in question until the price has been paid in full,
3. "interest rate" means a monthly VILIBOR interest rate (interbank offered rate, at which banks are willing to lend funds in litas to other banks), increased by 7 percentage points,
4. "late payment" means exceeding the contractual or statutory period of payment,
5. "the court" means a competent dispute settlement body.
6. "economic entities" means persons engaged  in economic commercial or professional activity in the manner prescribed by law,
7. "public authority" means any state or local authority, any public or private legal person, in respect of whom the Law of the Republic of Lithuania on Public Procurement is applicable.
 
Article 3. Interest in Case of Late Payment
1. Interest for late payment, prescribed by Article 4 of this Law, shall become payable from the day following the date or the end of the period for payment fixed in the contract.
2. If the date or the period for payment is not fixed in the contract, interest shall become payable automatically without the necessity of a reminder:
1) 30 days following the date of receipt by the debtor of the invoice or an equivalent request for payment; or
2) if the date of the receipt of the invoice or the equivalent request for payment is uncertain, 30 days after the date of receipt of the goods or provision of services or performance of works; or
3) if the debtor receives the invoice or the equivalent request for payment earlier than the goods or the services, 30 days after the receipt of the goods or provision of services or performance of works; or
4) if a procedure of acceptance or verification, by which the conformity of the goods or services or works with the contract is to be ascertained, is provided for by statute or in the contract and if the debtor receives the invoice or the equivalent request for payment earlier or on the date on which such acceptance or verification takes place, 30 days after this latter date.
3. The creditor shall be entitled to interest for late payment to the extent that:
1) he has fulfilled his contractual or legal obligations; and
2) he has not received the amount due on time, unless the debtor is not responsible for the delay.
4. Unless otherwise established by the contract, the amount of interest payable by the debtor shall be calculated applying the interest rate specified in Article 2(3) of this Law, which was in force in the half-year in question when the debtor became obliged to pay interest. During the first half-year the most recent interest rate, announced before the first calendar day of the first half-year shall be in force, for the following six months the most recent interest rate announced before the first calendar day of the second half-year shall apply.
5. Damage incurred by reason of late payment shall be compensated for according to the procedure laid down by the Civil Code.
 
Article 4. Contractual Terms Unfair to the Creditor
1. Where, after consideration of all circumstances of the case, including good commercial practice and the nature of the delivered products, provided services or performed works, it is determined that an agreement on the date for payment or on the consequences of late payment is unfair to the creditor, the creditor may apply to the court to declare the contractual terms unfair and to award damages.
2. In determining whether the contractual terms are unfair to the creditor, it shall be taken into account, inter alia, whether the debtor has any objective reason to deviate from the provisions of this Law, Article 3, paragraphs (2) to( 4).
3. If the contractual term is determined to be unfair to the creditor, the provisions of this Law, Article 3, paragraphs (2) to (4) shall be applied and the creditor shall also have the right to file a claim for damages, unless the court determines different conditions which are fair to the creditor.
 
Article 5. Retention of Title
The seller shall retain title to the goods in question until they are fully paid for, if a retention of title clause is provided for by the contract or statute.
 
Article 6. Dispute Settlement Body
1. Disputes concerning violations of the provisions of this Law, determination of contractual terms unfair to the creditor and compensation for damage shall be settled by court.
2. Besides the creditor, the claim may also be filed by the persons representing his interest.
 
Article 7. Final Provisions
This Law shall come into force as of 1 May 2004 and shall be applied only to commercial transactions concluded after the date.
 
I promulgate this Law passed by the Seimas of the Republic of Lithuania.
 
PRESIDENT OF THE REPUBLIC              ROLANDAS PAKSAS
 
 
Annex
to the Law of the Republic of Lithuania
of  9 December 2003 No. IX-1873
LEGAL ACTS OF THE EUROPEAN UNION WITH WHICH THE LAW OF THE REPUBLIC OF LITHUANIA ON THE PREVENTION OF LATE PAYMENT IN COMMERCIAL TRANSACTIONS HAS BEEN HARMONISED
 
The Law of the Republic of Lithuania  on the Prevention of Late Payment in Commercial Transactions has been harmonised with Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 on Combating Late Payment in Commercial Transactions