CJEU on payment terms – how will the ruling affect the practice of commercial contracting?

CJEU opposes longer payment terms. The landmark judgment unequivocally restricts the possibility to unilaterally extend payment terms beyond 60 days. Read about the consequences of this ruling for Polish companies.

On 6 February 2025, the Court of Justice of the EU handed down a key judgment (reference C-677/22) concerning the setting of payment periods in business-to-business transactions. The Court ruled that a payment period longer than 60 days cannot be unilaterally imposed. The exception is when both parties have expressly agreed to such a provision in the contract. The CJEU, interpreting Article 3(5) of Directive 2011/7, emphasised that a longer payment period must result from the unambiguous common will of the parties, as shown by the documents and terms of the contract.

The ruling issued concerned a dispute between the mine and a supplier of machinery and parts. The mine had unilaterally set a 120-day payment deadline and this was the case for a number of contracts with the supplier, both post-auction and post-tender.

Payment congestion in Poland. What does the judgment mean for Polish entrepreneurs?

The current Act on Prevention of Excessive Delay in Commercial Transactions, which implements EU Directive 2011/7, specifies the specific rights available to the creditor and the obligations incumbent on the debtor in the context of payment periods in commercial transactions, defines the consequences of non-compliance with these obligations, and establishes procedures for dealing with situations where there is excessive delay in payment.

The Act limits the payment period to 60 days. However, it is possible to set a longer payment period in the contract, provided that both parties expressly agree on this and that it does not constitute grossly unfair treatment of the creditor, in accordance with Article 7 of the EU Directive 2011/7.

The CJEU judgment on payment periods will be of key importance especially in the case of so-called adhesion contracts. These are contracts in which one of the counterparties is usually much stronger economically and unilaterally imposes long payment terms in contravention of the law against undue delay in commercial transactions.

Adhesion contracts leave the weaker party no choice: it can either accept the terms imposed or walk away from the deal. The CJEU decision will affect companies using adhesion contracts, including those concluded through auctions or non-public tenders, where there are payment terms of more than 60 days.

Compensation for delay: what amounts are creditors entitled to?

According to the regulations aimed at counteracting payment congestion, on the date on which interest for delay in a commercial transaction starts to accrue, the creditor also acquires the right to compensation for recovery costs. The amount of this compensation varies and depends on the value of the monetary consideration, as follows:

• for considerations not exceeding PLN 5,000, it is EUR 40,
• for considerations between PLN 5,000 and PLN 50,000 – EUR 70,
• for considerations exceeding PLN 50,000 – EUR 100.

According to the Act, the equivalent of the amount of compensation is determined using the average euro exchange rate announced by the National Bank of Poland on the last working day of the month preceding the month in which the monetary benefit became due. In addition to the amount of compensation, the creditor is also entitled to reimbursement, to a reasonable extent, of the recovery costs incurred in excess of that amount.

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Author:
Gabriela Kobyłecka
Junior Associate
TGC Corporate Lawyers