Dáil Éireann Debate, Wednesday - 2 June 2004
80 Mr. Gormley asked the Tánaiste and Minister for Enterprise, Trade and Employment if she intends to introduce legislation to make it easier for businesses, particularly small businesses and self employed persons, to prosecute those who do not pay their bills on time as it currently makes no financial sense to go to court; and if she will make a statement on the matter. [16698/04]
View answerOn 7 August 2002, the European Communities (Late Payment in Commercial Transactions) Regulations 2002, S.I. No. 388 of 2002, came into operation on foot of Directive No. 2000/35/EC of the European Parliament and of the Council. These regulations largely replaced the Prompt Payment of Accounts Act 1997, which applied to State, semi-State and certain designated entities. The European Communities (Late Payment in Commercial Transactions) Regulations 2002 apply to all commercial transactions with the following exceptions: contracts made before 7 August 2002; claims for payment of late interest of less than €5; transactions with consumers and debts that may be subject to legislation other than these regulations.
It is an implied term of every commercial transaction that where a purchaser does not pay for goods or services by the relevant payment date, the supplier shall be entitled to interest — late payment interest — on the amount outstanding. Interest shall apply until such time as payment is made by the purchaser. The current interest rate is 9% per annum or .0247% on a daily basis. It is calculated at seven percentage points above the European Central Bank interest rate to its most recent main refinancing operation carried out before 1 January and 1 July each year. In the absence of any agreed payment date between the parties, late payment interest falls due after 30 days have elapsed.
The use of terms that are grossly unfair may be unenforceable and such terms may be challenged in court. Criteria for testing whether terms are grossly unfair are specified in the regulations and such terms may also be challenged by organisations representing small and medium sized enterprises. The regulations also provide for debt recovery costs.
Since these regulations were made, my Department has been advising purchasers and suppliers to agree mutually acceptable credit terms prior to any commercial transaction. I consider this matter is very much related to the area of contract law and I do not have any plans to introduce legislation in the near future.
As failure to pay late payment interest is a civil and not a criminal matter there are no provisions in the regulations for enforcing the debt as there are already established procedures for pursuing such debt through the civil courts. A review of these procedures would be a matter for my colleague, Deputy McDowell, the Minister for Justice, Equality and Law Reform.
