On 8 February 2013, the Sejm enacted a new law on the terms of payment in commercial transactions. As argued in the rationale for the bill, the purpose of the legislation is to combat the growing problem of late payments by introducing instruments improving the effectiveness of payments in transactions between undertakings and between undertakings and public authorities. Consequently, the new law is expected to contribute to creating a safer business environment. Without any doubt this is good news for businesses battling against unreliable contractors effecting their payments long after the agreed deadlines, thus adversely affecting financial liquidity and profitability of businesses.

The need to adopt a new law was due to the required incorporation into the national legislation of a new Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions that replaced the previously effective Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000, incorporated into Polish legislation under the Act on Terms of Payment in Commercial Transactions of 12 June 2003 (Journal of Laws No. 139, item 1323, as amended).

Since the previously effective legislation on terms of payment in commercial transactions turned out to be too lax, the new law provides for a number of solutions designed to help reduce late payments and discipline the parties to commercial transactions to apply short terms of payment.

Firstly, it needs noting that compared to the previously effective regulations the new law applies to a broader range of entities. In addition among others to undertakings, entities engaging in business activity, the self-employed, branches and representative offices of foreign undertakings, and entities required to apply the Public Procurement Law, the new regime applies also to undertakings organised in EU Member States and EFTA Member States – parties to the Agreement on the European Economic Area or in the Swiss Confederation. The scope of the new law, similarly to the previous one, does not include consumers.

The second significant revision relates to the modification of the principles for setting interest applicability dates and of the interest calculation procedure. Under the previous regime, creditors had the statutory right to request statutory interest, in a situation when the parties provided for a term of payment in excess of 30 days under the agreement, for the period starting on the 31st day after the non-pecuniary performance is effected by the creditor and an invoice or bill is delivered to the debtor until the date of payment, however, no longer than to the maturity date of the pecuniary performance (the socalled trade credit charge). The right to request interest for the above period pertained also to a situation when the parties did not set any term of payment under the agreement. The new law retains the above rights but excludes the application of the former to debtors being healthcare entities.

Next, it must be noted that the new law introduces a principle that the term of payment expressly laid down under the agreement must not exceed 60 days from the date of delivery of the invoice or bill to the debtor confirming that the goods have been supplied or the services provided. Yet, the parties will be able to agree a different date providing that it does not contravene the social and economic purpose of the agreement or public policy and is objectively justified taking into account properties of the goods or the service. If the above requirements are not fulfilled, then agreeing a term in excess of 60 days is deemed default on payment, and the creditor is entitled to late-payment interest at a rate based on the provisions of the Tax Ordinance (11.5% in March 2013) unless the parties agree a higher rate of interest (providing of course that the creditor duly performs its contractual and statutory obligations).

Under the new law, in the event of a transaction between undertakings and public authorities, the term of payment may not exceed 30 days or 60 days in the case of healthcare entities. However, the 30- day term may be extended to up to 60 days if such extension is objectively justified by the properties or specific elements of the agreement. Upon expiry of the term, the creditor will be entitled to late-payment interest.

The new legislation also provides for a possibility to agree a term of up to 30 days for examination of compliance of the goods or the service with the agreement, and a flat-rate compensation on account of recovery costs of amounts arising under the new law, payable by the debtor to the creditor, being the PLN equivalent of EUR 40.

It is significant that claims arising under the new legislation will be pursued in the course of proceedings by writ of payment (postępowanie nakazowe), which may considerably decrease the time of enforcing claims and reduce the costs of the proceedings.

The new law comes into force upon expiry of 30 days from the date of its promulgation. It must be stressed that the new regime will not apply to agreements concluded prior to the new legislation’s effective date.