Enforced Contract Terms – Law 72/2013

Last week we were approached by an international contractor who asked us to consider the question of interest in his contract. Like all Romanian Lawyers we have in the past considered Law no 72/2013 which was introduced in April 2013. Law 72/2013 is intended to combat late payments in commercial transactions. This Law implemented the provisions of Directive 2011/7/EU and brought about new rules and prohibitions with respect to payments to be made in Romanian commercial transactions.

The Law was introduced with little publicity and is I think worth a quick visit on some points. The aim of the provisions is to combat late payment in commercial transactions between businesses as well as transactions between companies and public authorities. The Law covers the delivery of goods or the provision of services, including the design and execution of public works and building and civil engineering works.

The Law applies to monetary claims for debts which are due, certain and liquid. It does not apply to transactions between professionals and consumers and debts registered with the list of liabilities under the insolvency procedure.

One of the first things that come to mind is that now the Law is removing from certain commercial areas the rights of the parties to freely contract and is imposing terms which take away the right to freely negotiate a contract. This is different from setting out basic terms which some contracts do but here it specifically takes away the rights to freely negotiate.

If the parties have not agreed a payment period then basically the creditor is entitled to interest for late payment on the expiry of 30 days from the receipt of the invoice by the creditor. If the date of the receipt is uncertain or the creditor receives the invoice before the delivery of the goods then the period is 30 days of the receipt of the goods or services. There are rules covering the receipt of goods subject to verification but the whole emphasis of the Law is to require interest to be payable 30 days after the delivery of the goods.

In the case of transactions between professionals, then according to Law 72 the period is 60 days. In these cases the parties can agree a longer period provided the period is not manifestly unfair or abusive. Where professionals are dealing with local authorities or similar organizations it is fair to note that the period is 30 days.

The Law does provide for the issuing of invoices in that the parties cannot contractually agree upon a date for the issue of an invoice. Any such contractual clause is void. Furthermore, for those who have studied the relevant EU directive they will note that Law 72 goes beyond the provisions of the Directive and includes contracts concluded between professionals. The level of interest is also fixed under the Law at the reference rate plus 8 percentage points.

Certain contractual provisions even if negotiated by the parties are now null and void and this takes away the freedom to contract as mentioned above. The types of clauses which are now ruled null and void are inter alia the exclusion of paying interest; establishing a longer period before interest is payable; establishing a payment term longer than 60 days. The courts have also been given power to consider other contractual terms as abusive depending on the facts of the case.

The Law came into force in April 2013 and applies to all contracts entered into after that date and therefore did not affect previous contracts unless there is an application of abusive clauses. These are declared null and void whenever the contract was concluded. This will have a bearing on a number of Romanian infrastructure contracts concluded before 2013 where payments have still not been made.

As there have been many claims in the past by contractors with the Government or similar bodies as well as private contracts it will be interesting to see in the future if this Law brings about the intention of the legislators or the situation will still continue with financial blockages in major contracts in Romania.

:: The source: Romania Law Blog

Nicholas Hammond
Guest writer. Senior Partner of BWSP Hammond Bogaru & Associate

Related posts