Limits on unjustified late payment in transactions between businesses

Under the Commerce Act, the parties to a commercial transaction may agree a payment period of no more than sixty days. Exceptionally, they may agree a longer period where the circumstances require it. The agreement must neither unfairly prejudice the creditor’s interests nor offend good commercial practice.

Article 303a of the Commerce Act transposes into Bulgarian law the requirements of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions. It repealed Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000, which previously governed the same matter at EU level. Both the wording of the Bulgarian provision and the overall purpose of the EU directives show the clear, shared intention of the national legislature and the EU institutions to limit unjustified late payment between businesses as far as possible.

Paragraph 2 restricts freedom of contract where the debtor is a public contracting authority, meaning a person within Article 5(2)–(4) of the Public Procurement Act, as provided in § 1г of the supplementary provisions of the Commerce Act. The period for payment may not exceed 30 (thirty) days, unless the exceptions under paragraph 1 apply, in which case the maximum is 60 (sixty) days. Whether a debtor is a public contracting authority within the meaning of Article 5(2), point 16, of the Public Procurement Act must be established from both its legal and organisational form and the nature of its activities. Both are apparent from the entries in its file in the Commercial Register maintained by the Registry Agency at the Ministry of Justice.

This article is not a legal opinion or advice about a particular situation or person. The author makes no claim to cover commercial transactions exhaustively. For legal assistance in a similar case, consult a lawyer specialising in commercial law.