Commercial Code (Amendment) Order, 2005

L.N. 233 of 2005

EUROPEAN UNION ACT

(CAP. 460)

Commercial Code (Amendment) Order, 2005

IN exercise of the powers conferred upon him by article 4(2) of

the European Union Act, the Prime Minister has made the following

(1) This Order may be cited as the Commercial Code

(Amendment) Order, 2005.

(2) The purpose thereof is to transpose the provisions of

Directive 2000#35#EC of the European Parliament and of the Council

of the 29 th June, 2000 on combating late payments in commercial

(3) This Order shall come into force on the 1 st July, 2005.

Immediately after Sub-Title I of Title II of the Commercial

Code there shall be added the following new Sub-Title>

“Sub-Title IA

OF LATE PAYMENTS IN COMMERCIAL

TRANSACTIONS

“26A. For the purposes of this Sub-Title -

“commercial transactions” means transactions

between traders, between traders and public authorities

and between members of the liberal professions and

traders or public authorities, which lead to the delivery

of goods or to the provision of services for remuneration<

“enforceable title” means any decree, judgment or

order for payment issued by a Court by law or other

competent authority, whether for immediate payment or

payment by instalments which permits the creditor to

have his claim against the debtor collected by means of

forced execution. It includes any such decree, judgment

or order for payment that is provisionally enforceable

and remains so even if the debtor appeals against it<

“public authority” means the Government of Malta,

Local Councils and other public bodies where a body is

considered to be a public body when it>

- is established for the specific purpose of

meeting needs in the general interest, not being of

an industrial or commercial nature,

-

has legal personality, and

- is financed for the most part by the State,

or Local Councils or other public bodies, or is

subject to management supervision by those bodies,

or has an administrative, managerial or supervisory

board more than half of whose members are

appointed by the State, Local Councils, or other

public bodies<

“undertaking” means any organisation acting in the

course of its independent economic or professional

activity, even where it is carried on by a single person<

“late payment” means a payment which is still due

after the contractual or statutory period established for

payment<

“retention of title” means the contractual agreement

according to which the seller retains title to the goods in

question until the price has been paid in full<

“reference rate” means the central intervention rate

established by the Governor of the Central Bank of Malta

in terms of the powers granted to him in Part IIA of the

Central Bank of Malta Act in force on the first calendar

day of the half year during which interest becomes due

and which for the purposes of this Sub-Title shall apply

for the following six months<

“interest rate” means the reference rate in force on

the first calendar day of the half year during which

interest becomes due, plus seven percent (7%).

The provisions of this Sub-Title shall,

notwithstanding the provisions of any other law, apply to

payments made as remuneration for commercial transactions,

irrespective of whether they are carried out between private

bodies, public authorities or both, including commercial

transactions to which members of the liberal professions are

a party, with effect from the 1 st July, 2005>

Provided that this Sub-Title shall not regulate

transactions of traders, public authorities or of members of

the liberal professions with consumers, interest in connection

with other payments not regulated by this Sub-Title, such as

payments under any provision of this Code or of any other

law in respect of cheques and bills of exchange or payments

made as compensation for damages including payments from

insurance companies.

(1) Interest payable in accordance with this

Sub-Title shall become payable from the day following the

date or the end of the period for payment fixed in the contract.

(2) If the date or period for payment is not fixed

in the contract, interest shall become payable automatically

without the necessity of a reminder>

(i) 30 days following the date of receipt by the

debtor of the invoice or an equivalent request for

payment< or

(ii) if the date of the receipt of the invoice or the

equivalent request for payment is uncertain, 30 days after

the date of receipt of the goods or services< or

(iii) if the debtor receives the invoice or the

equivalent request for payment earlier than the goods or

the services, 30 days after the receipt of the goods or

services< or

(iv) if a procedure of acceptance or verification,

by which the conformity of the goods or services with

the contract is to be ascertained, is provided for by law

or in the contract and if the debtor receives the invoice

or the equivalent request for payment earlier or on the

date on which such acceptance or verification takes place,

30 days after the latter date.

(3) The creditor shall be entitled to interest for

late payment to the extent that>

(i) he has fulfilled his contractual and legal

obligations< and

(ii) he has not received the amount on due time,

unless the debtor is not responsible for the delays.

(4) The rate of interest for late payment which

the debtor is obliged to pay, shall be the interest rate as defined

in article 26A, unless otherwise specified in the contract. The

reference rate in force on the first calendar day of the half

year during which interest becomes due shall apply for the

following six months.

(5) Unless the debtor is not responsible for the

delay, the creditor shall be entitled to claim reasonable

compensation from the debtor for all relevant recovery costs

incurred through the debtor’s late payment.

(6) Any agreement on the date for payment or on

the consequences of late payment which is not in accordance

with the provisions of sub-articles (2), (3) and (4) of this article

shall give rise to a right to claim for damages if when all

circumstances of the case including good commercial practice

and the nature of the product are considered, it is grossly unfair

to the creditor>

Provided that in determining whether an agreement is

grossly unfair to the creditor, it shall be taken, inter alia, into

account whether the debtor has any objective reason to deviate

from the provisions of sub-articles (2), (3) and (4) of this

article. If such an agreement is determined to be grossly

unfair, the terms established in this Sub-Title shall apply unless

the First Hall of the Civil Court upon the application of any

party interested determines different conditions which are fair

and which are to apply.

In the case of a commercial transaction consisting

of the sale of movables, the seller shall be entitled to retain

title of the same until the price thereof is fully paid if such

retention of title has been expressly agreed to in writing

between the buyer and the seller before the delivery of the

said movables.

The provisions of this Sub-Title shall not apply

to>

(i) debts that are subject to insolvency

proceedings instituted against the debtor<

(ii) contracts that have been concluded prior to

st

the 1 May, 2004<

(iii) interest payments of less than two liri.”.