More accuracy will be required from merchants and public authorities as customers

The Civil Law is supplemented with a new sub-section “Delay regarding agreements on delivery or purchase of goods or provision of services”. This new sub-section introduces several requirements for additional protection of the creditor against the debtor’s delay.
The most significant what was introduced with the said amendments is the following.
The presumption of “delay” is stipulated. Article 16682 stipulates that the debtor’s (i.e. the customer’s) delay along with all its legal consequences (including an obligation to pay interest and contractual penalty, as well as to compensate for  damages) shall be presumed if payment is not made within thirty days after receipt of an invoice, goods or services, acceptance of goods or services or inspection of goods. It is worth noting that the said presumption is primarily applicable to transactions with a party which shall be regarded as a customer within the meaning of the Public procurement law – i.e. notably state and municipal authorities, as well as state and municipal companies which order goods or services according to the Public procurement law. However, this presumption of delay shall be applied also to agreements where the customer is not a public person, provided a term of payment is not stipulated in the agreement and the customer shall not be regarded as a consumer.
In fact, the said presumption of delay prescribes the thirty-day period as a standard time period for performance of payment for the delivered goods and provided services. Articles 16686 and 16687 of the Civil Law permit a possibility of the parties to agree also on a longer term of payment – up to sixty days which shall be considered as the longest acceptable term of payment. However, it should be observed that such longer term of payment shall not be acceptable if it creates an unfair delay of performance or may not be justified with the particulars of the obligation to be performed.
Article 1668.8 of the Civil Law provides for a right of a contractor to receive a minimum guaranteed compensation in the amount of 30 Lats (approximately 42 EUR) for the debt recovery.
In addition, the interest rate specified article 1765, paragraph 2, of the Civil Law is increased by 1% (from 7% to 8% per annum). This interest rate shall be applied in addition to the basic rate set annually by the Bank of Latvia twice a year, in respect of delay of payment for delivery or purchase of goods or provision of services. Therefore, from July 24, 2013 the compound interest rate of 10% per annum (having regard of the basic rate currently set by the Bank of Latvia) shall be applied in respect of delay of payment for delivery or purchase of goods or provision of services, and 8% per annum regarding contractual relations where there is a consumer .

Author
Lauris Rasnacs, Dr.iur., Attorney at Law, Partner, ECOVIS CONVENTS Law Office
lauris.rasnacs@ecovis.com