Commercial Code (Amendment) Order, 2012

L.N. 272 of 2012

EUROPEAN UNION ACT

(CAP. 460)

Commercial Code (Amendment) Order, 2012

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

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

Order:-

The title of this Order is the Commercial Code Citation.

(Amendment) Order, 2012, and this Order shall be read and construed

as one with the Commercial Code, hereinafter referred to as "the Cap. 13

Code".

For Sub-Title IA of Title II of the Code, there shall be Substitutes Sub-

substituted the following new Sub-Title

"Sub-Title IA

OF LATE PAYMENTS IN COMMERCIAL TRANSACTIONS

For the purposes of this Sub-Title

Definitions for

the purpose of

"amount due" means the principal sum

this Sub-Title.

which should have been paid within the

contractual period of payment, including,

where applicable, taxes, duties, levies or

charges specified in the invoice;

"commercial

transactions"

means

transactions between undertakings or between

undertakings and public authorities, which

lead to the delivery of goods or the provision

of services for remuneration;

"Commission Directive 2006/111/EC"

means the Commission Directive of 16

November 2006 on the transparency of

financial relations between Member States

and public undertakings as well as on

financial

transparency

within

certain

undertakings;

"enforceable title" means any decree,

judgment or order for payment issued by a

Court 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;

"interest for late payment" means

statutory interest for late payment or interest

at a rate agreed between the undertakings,

subject to the provisions of article 26G;

"invoice" means a bill sent by a provider

of a product or service to the purchaser. The

invoice establishes an obligation on the part

of the purchaser to pay. For the purpose of

this definition, "invoice" includes an

equivalent request for payment;

"late payment" means payment not made

on the date agreed upon in the contract or

according to law, and on the fulfilment of the

conditions laid down under article 26C(1) and

article 26D(1);

"legal interest for late payment" means

simple interest for late payment at a rate

which is equal to the sum of the reference rate

and at least eight percent (8%);

"public authority" means the Government

of Malta, the Local Councils or bodies

governed by public law, associations formed

by one or several of such authorities or bodies

governed by public law.

For the purpose of this definition, "a body

governed by public law" means a body which

(a) is established for the specific

purpose of meeting needs in the general

interest, not being of an industrial or

commercial nature;

(b) has legal personality; and

(c) 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;

"reference rate" means the interest rate

applied by the European Central Bank to its

most recent main refinancing operations, or

the marginal interest rate resulting from

variable-rate tender procedures for the most

recent main refinancing operations of the

European Central Bank;

"undertaking" means any organization,

other than a public authority, acting in the

course of its independent economic or

professional activity, even where that activity

is carried out by a single person.

26B The provisions of this Sub-Title

Scope of this

Sub-title.

shall, notwithstanding the provisions of any

other law, apply to payments made as

remuneration for commercial transactions

carried out between private and public

undertakings, between undertakings and

public authorities, and between main

contractors and their suppliers and

subcontractors, as from 1st March, 2012

Provided that this Sub-Title shall not

regulate transactions between consumers,

interest in connection with other payments

such as payments under the laws on cheques

and bills of exchange, or payments made as

compensation for damages including payment

from insurance companies.

(1) In the case of transactions

Interest in the

case of late

between undertakings, the creditor shall be

payment in

transactions

entitled to interest for late payment to the

between

extent that it

undertakings.

(a) has fulfilled its contractual

and legal obligations; and

(b) has not received the amount

due on time, unless the debtor is not

responsible for the delay.

(2)

The creditor may proceed with the

claim of late payment against the debtor

without reminding the debtor that the amount

is due.

(3)

On fulfilment of the conditions

under sub-article (1), the creditor shall be

entitled to interest for late payment from the

day following the date or the end of term for

payment fixed in the contract

Provided that when the date or term for

payment is not fixed in the contract, the

creditor shall be entitled to late payment upon

the expiry of any of the following time limits

(a)

thirty

calendar

days

following the date of receipt by the

debtor of the invoice;

(b) thirty calendar days after the

date of receipt of the goods or services,

when the date of the receipt of the

invoice is uncertain;

(c) thirty calendar days after the

date of the receipt of the goods or

services, when the debtor receives the

invoice earlier than the goods or

services;

(d) thirty calendar days after the

date when according to law as agreed or

in the contract the product has to be

ascertained or verified, and the debtor

receives the invoice earlier or on the

date on which such acceptance or

verification takes place

Provided further that the parties to a

contract may expressly agree in the contract

or in any tender document to extend the thirty

calendar day period under paragraph (d) to a

longer period, so long as the extension of time

is not grossly unfair to the creditor.

(4)

Irrespective of any other law, the

period for payment fixed in a contract may

not exceed sixty calendar days

Provided that the parties may expressly

agree for a longer period, so long as the

extension of time is not grossly unfair to the

creditor.

(5)

The applicable reference rate for

(a) the first semester of the year

concerned shall be the rate in force on 1

January of that year;

(b) the second semester of the

year concerned shall be the rate in force

on 1 July of that year.

26D (1) In the case of transactions

Interest in the

case of late

between undertakings as creditor and public

payment in

transactions

authorities as debtor, the creditor shall be

between

entitled to legal interest for late payment to

undertakings

and public

the extent that it

authorities.

(a) has fulfilled its contractual

and legal obligations; and

(b) has not received the amount

due on time, unless the debtor is not

responsible for the delay.

(2)

The creditor may proceed with the

claim for late payment against the debtor

without reminding the debtor that the amount

is due.

(3)

On fulfilment of the conditions

under sub-article (1), the creditor shall be

entitled to interest for late payment upon the

expiry of either of the following time limits

(a) thirty

calendar

days

following the date of receipt by the

debtor of the invoice;

(b) thirty calendar days after the

date of receipt of the goods or services,

when the date of the receipt of the

invoice is uncertain;

(c) thirty calendar days after the

date of the receipt of the goods or

services, when the debtor receives the

invoice earlier than the goods or

services;

(d) thirty calendar days after the

date when according to law or in the

contract the product has to be

ascertained or verified as being in

conformity with the contract, and the

debtor receives the invoice earlier or on

the date on which such acceptance or

verification takes place

Provided that

(i)

the duration of the procedure

relating to acceptance or verification

referred to in paragraph (d) shall not

exceed thirty calendar days from the

date of receipt of the goods or services

unless expressly agreed otherwise by the

parties in the contract or in a tender

document, and provided that it is not

grossly unfair to the creditor within the

meaning of article 26G;

(ii) unless expressly agreed to

between the creditor and debtor in a

contract, the period for payment fixed in

the contract may not exceed the limits

under paragraph (a) to (d), and when

such agreement is reached, the period

for payment fixed in the contract may

not exceed sixty calendar days;

(iii) the time period mentioned

under paragraphs (a) to (d) shall be

extended to sixty calendar days for

1. any public authority

which carries out economic

activities of an industrial or

commercial nature by offering

goods or services on the market

and which is subject as a public

undertaking to the transparency

requirements

laid

down

in

Commission Directive 2006/111/

EC;

2. public

entities

providing health care which are

duly recognized for that purpose.

(4)

An agreement between the creditor

and debtor extending the date of receipt of the

invoice is null and void.

(5)

The applicable reference rate for

(a) the first semester of the year

concerned shall be the rate in force on 1

January of that year;

(b) the second semester of the

year concerned shall be the rate in force

on 1 July of that year.

In addition to the claim for late

Compensation

for recovery

payment under this Sub-Title, a creditor is

costs.

entitled to recover from the debtor

(a) a minimum of forty euro

(€40) as compensation for the creditor’s

own recovery costs; and

(b) such other reasonable sum in

excess of the forty euro (€40) incurred

by him due to the debtor’s late payment.

Nothing in this Sub-Title shall

Payment

schedules.

prohibit parties from reaching an agreement

on payment being effected periodically by

means of instalments

Provided that where an instalment is not

paid within the agreed date, the payment of

interest and compensation shall be calculated

solely on the basis of overdue amounts.

(1) A provision in an agreement

Provision or

practice which

or a practice, which relates to the date or

is unfair to the

creditor.

period of payment, the rate of interest for late

payment or the compensation for recovery

costs, may be unenforceable or may give rise

to a claim for damages, if such provision or

practice is grossly unfair to the creditor.

(2)

In determining whether a provision

or a practice is grossly unfair to the creditor,

the following shall be taken into

consideration

(a) any gross deviation from

good commercial practice is contrary to

good faith or fair dealing;

(b) the nature of the product or

the service; and

(c) whether the debtor has any

objective reason to deviate from the

legal rate of interest for late payment,

from the payment periods referred to in

articles 26C(4) and 26D(3), sub-

paragraph (ii) of the proviso to article

26D(3), sub-paragraph (iii) of the

proviso to article 26D(3), or from the

fixed sum as referred to in article

26E(a).

(3)

For the purpose of this article, a

provision in a contract or a practice which

excludes

(a) interest for late payment,

shall be deemed as grossly unfair;

(b) compensation for recovery

costs, shall be presumed to be grossly

unfair.

An agreement to a commercial

Retention of

title.

transaction which provides for the retention of

title between the vendor and the purchaser,

shall entitle the vendor to retain title over the

goods until the price has been paid in full by

the purchaser.".

€0.72