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Changes to calculation of interest from delay in payment

photo:  (sxc.hu)

Interest from delay is a sanctioning payment, which the creditor is entitled to for breach of the debtor’s duty of performing its financial obligation duly and on time. The creditor is entitled to this regardless of the circumstances causing the delay.

This concerns a sanction that is applied without taking into account whether the delayed performance of the financial obligations was caused by the debtor or, for instance, by a force majeure. This means that any validation of origin of the delay is legally insignificant.

Interest from delay is consequently a sanction that only applies to financial obligations. Within the terms of a commercial relationship the creditor and the debtor may arrange contractual interest which differs to statutory interest. Unless otherwise arranged statutory interest from delay is applied, the value of which is specified by the statutory instrument. The value of interest from delay is dependent on the repo rates set by the Czech National Bank.

To date the value of interest from delay was adjusted every six months, i.e. on 1st January and 1st July of the calendar year. Currently the value of interest from delay, i.e. from 1st January 2010 until 30th June 2010 corresponds to the annual value of the repo rate set by the Czech National Bank, increased by 7%.

The change to calculation of interest from delay, when the value of the interest from delay is not contractually arranged, will become valid from 1st July 2010. This specifically means that interest from prior delay will continue to be adjusted, but interest from newly commenced delay (after 1st July 201) will remain unchanged throughout the whole period of delay. The annual value of interest from delay will newly correspond to the value of the repo rate set by the Czech National Bank for the last day of the calendar half-year, which precedes the calendar half-year in which the delay occurred, increased by 7%.
Author: Ivana Jenerálová
Added: 08.04.2010

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