Code of Commerce: Legal Penalty for Late Payment

By means of Law No. 7 of May 17, 2000, article 233A is added to the Code of Commerce to create a legal surcharge or penalty upon late payers in connection with the financing of services and wholesale goods.

The amendment provides that the obligations that arise out of wholesale purchase contracts and service contracts (arrendamiento de servicios), among manufacturers, producers, merchants and businessmen, in which the provider of the good or service does not grant financing to the debtor, including the contracts in which the payment of an obligation within 30 days or other, are deemed to be cash obligations.

If the debtor pays after the 30-days period or other agreed by the parties, unless the parties have agreed other surcharge or specific indemnity, a legal surcharge shall come into effect in favor of the creditor of 1% compound monthly of the value of the owed sum.

The late payer must pay, in addition to the debt, this surcharge, which will be calculated daily based on the calendar month, from the day in which the obligation is due.

The resulting surcharges shall be capitalized monthly, from the first day of the following month in which the surcharges were caused.

The final consumers and clients of public services are excluded from the scope of application of this legislation.