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The Warsaw Voice » Law » October 24, 2002
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Increasing Effectiveness
October 24, 2002 By R.S.    
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It is probable that the law intended to eliminate overdue payments among small businesses, which came into effect Jan. 1, 2002, will soon be amended.

The law in question outlines the payment deadlines of economic turnover and was designed to prevent these deadlocks. The Ministry of the Economy is currently working on amendments to the law.

The original law was designed for small businesses and farmers. It specifies that if a contract between a small business or producer and another party—which is neither a small business nor a producer—sets a payment deadline longer than 30 days, the receiver is obliged to pay interest from the 31st day after receipt of the goods or services.

This regulation, however, does not apply to contracts signed with institutions that belong to the public sector. Pharmacies and pharmaceutical wholesalers are also not including in this law, which is why the amendment is necessary.

The new bill widens the law to include contracts in which one of the parties is part of the public sector. Excluding these contracts from the law conflicts with an EU directive regarding combating payment delays in sales transactions. The proposed changes are intended to force public sector institutions to pay within the deadline if the second party is a small business.

A large business must presently pay interest only if the supplier demands it. This is one of the main causes behind the law's ineffectiveness. Small enterprises are therefore encouraged to give up that interest in order to keep the contract, and it is only illegal to make a formal agreement which confirms the loss of this privilege.

The amendment proposes compulsory interest payments in the case of delays between small businesses or agricultural producers and public sector institutions, which in practice affects public orders. If the payment deadline was not defined in the contract, interest automatically accrues for small businesses after the 31st day of the receipt of the goods or services.

According to experts, this is insufficient, and automatic interest payments should be applied to all of the contracts outlined in the law. Limiting this regulation to public orders does not make any sense when almost all such contracts specify a payment deadline. This is a result of the procedures regarding public orders. Automatic payments may increase the law's effectiveness.

Many enterprises would certainly be pleased if—as is proposed in the draft amendment—the law also applied to contracts in which one of the parties provides medical services, as well as those involving pharmacies or pharmaceutical wholesalers.
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