Penalties in case of non-respect of payment terms in France

As from 1 January 2009, penalties are introduced in France in case of non-respect of certain maximal payment terms (fixed by the article L 441-6, subparagraph 9 of the French “Code de Commerce”).

This law is applicable for all contracts concluded after 1 January 2009, for all orders set after this date in case of framework agreements, and for all tacitly extended contracts.  

The law implies that each manufacturer, service provider, wholesaler or importer must communicate its terms and conditions to each of its contract parties.

They have to respect the following payment terms:

If nothing is specified or agreed, the payment term of the amounts due is fixed at 30 days after receipt of the goods or the execution of the services.

This payment term (30 days) can be fined with a penalty of up to 15.000 €.

If the contract (general terms) specifies another payment term it may not exceed 45 days after the end of the month or 60 days from the date of issuance of the invoice.

 

If these payment terms are not respected, it may be sanctioned with interests and damages including civil penalties of up to 2 millions of Euros.

Approximately 40 sectors have the approval from the French government to introduce such payment terms as set forth by the law step by step and not necessarily on 1 January 2009. But, these sectors have to introduce the new payment terms at the latest in 2012.

The list of these sectors can be consulted on the following website of the DG of competition, and consumer problematics (DGCCRF) of the French Department of Economy, industry and employment:

http://www.dgccrf.bercy.gouv.fr/documentation/lme/derogations_delais_paiement.htm

On this website it is possible to verify, sector by sector, whether the company, to which a payment must be made, or from which a payment has to be received, can make use of the government approval, and to what extend.

This law is very important for all enterprises – including enterprises located abroad – that have a commercial relationship with a French enterprise. Indeed, this law is also applicable if either the supplier or the buyer is situated outside of France.