Contracts: Compensation in the event of overdue payment - What can you claim?

Publication date: 26 January 2017
Creditors are entitled to statutory (commercial) interest over the period a defaulter is too late making payments. In addition, a penalty for overdue payment may be included in the contract. Can a creditor claim both, the contractual penalty and the statutory (commercial) interest?


Statutory (commercial) interest

Creditors are entitled to statutory (commercial) interest over the period a defaulter is too late making payments. This does not need to be agreed upon in the contract.

The statutory commercial interest applies to commercial agreements. These are business agreements, for instance, between two businesses or between a business and a government body. The statutory interest rate applies to other situations, such as agreements concluded with consumers.

The statutory commercial interest rate is significantly higher than the statutory interest rate. Currently, the statutory commercial interest rate is 8% and the statutory interest rate is 2%. Agreements concluded before 1 December 2002 might be subject to different rules.

Contractual penalty

The parties may choose to include a penalty clause in the contract. Such a clause may stipulate, for instance, that the debtor has to pay the creditor 3% of the amount due for each day he is late making payments.

Contractual penalty substitutes statutory (commercial) interest

Pursuant to the law, a penalty clause substitutes the compensation, including the statutory (commercial) interest. As a consequence, in case of late payment, the creditor in principle cannot claim a contractual penalty plus the statutory (commercial) interest. Also, in case of a penalty clause, it is not possible to opt for the statutory (commercial) interest if this will lead to a higher compensation than the penalty agreed upon, unless this was explicitly included in the agreement.

Derogating by agreement

The parties are free to derogate from this statutory regulation, but they must explicitly agree on this in the contract or the General Terms & Conditions. In practice, the following 3 ways of derogation can be found frequently:

  • Apart from the contractual penalty, compensation (including the statutory (commercial) interest rate) can be claimed.
  • Apart from the contractual penalty additional compensation can be claimed. The frequently used stipulation “without prejudice to the right to additional compensation” (onverminderd het recht op verdere schadevergoeding) falls under this category. If the creditor can prove that the statutory compensation exceeds the contractual penalty, the amount exceeding the penalty can be claimed in addition to the penalty. Thus, only the additional amount exceeding the penalty qualifies for compensation and not the entire statutory compensation.
  • The contractual penalty substitutes one specific kind of damage, when other damage can still be claimed.

Statutory interest on the contractual penalty

The main rule is that the creditor cannot claim both, the contractual penalty and the statutory (commercial) interest rate on the principal sum. However, the creditor may claim statutory interest on the contractual penalty in case the payment is late. This applies to trade agreements as well. However, claiming the statutory commercial interest rate on the contractual penalty is not allowed.

More information

Would you like us to draft a penalty clause or other sanctions on your behalf? Or would you like to learn more about the statutory (commercial) interest rate and contractual penalties? Please contact:

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