Once upon a time, there was a building contractor who was asked by a customer to do three things: design a gym, do some work on a number of houses and apply for planning permission. Halfway into the project, however, the customer decided that it no longer wished to use the contractor’s services. Well, these things happen. Naturally, the contractor wanted to make sure that it got paid for all the work it had done. As indeed it was entitled to.
Although the contractor did not invoice its customer, it did send a formal notice of default setting out the cost of the design work, the project management costs, the cost of refurbishing each house and the amount of VAT involved. The notice did not set a deadline for the payment of these costs.
Interest due as from 30 days after a request for payment is received, even without an invoice
Under an EU Directive, all EU member states are required to ensure that, if no final date for payment is included in a contract, interest nevertheless becomes payable (at the commercial rate) as from 30 days after receipt of an invoice or an equivalent request for payment. The interest charge can mount quickly: whereas the plain-vanilla statutory rate of interest currently stands at 2% in the Netherlands, the ‘commercial rate’ is no less than 8.05% at the moment!
Article 119 (2) of Book 6 of the Dutch Civil Code states that interest is due at the commercial rate in any event as from 30 days after receipt of the invoice, but does not make any mention of ‘an equivalent request for payment’.
Not surprisingly, the Supreme Court of the Netherlands recently ruled that interest is payable at the commercial rate as from (at least) 30 days after receipt of a request for payment, even if no invoice has been received. In other words, if your customer claims not to have received an invoice, but simply a request for payment not stating a final date for payment, you should bear in mind that the interest meter still starts running one month later. So if you happen to be owed a large amount of money and if the debt has been outstanding for, say, four years, you may find it comforting to know that interest has been accruing on the debt for the same period.
Interested in collecting a large bad debt – with interest?
If you are owed one or more bad debts that you have written off as being probably uncollectible, our Debt Collection department may well able to help. They have a good instinct for the type of approach that works best, whether this involves a letter, a claim form, a writ of attachment or a petition for bankruptcy. Feel free to get in touch.