11 March 20243 minute read

Guide to Going Global - Payment Terms

Insights into commercial contracts across key jurisdictions

Navigating the intricate web of contractual obligations across diverse jurisdictions is a challenge for any lawyer crafting a commercial agreement. Beyond the legal terms expressly set out in a contract, a broad range of implied terms may also apply to the document, impacting how the contract operates.

In this guide, curated by DLA Piper’s contract law teams across jurisdictions, we shine a spotlight on the ‘payment term' clause that sets out the number of days for payment - a clause of vital importance and one that requires careful consideration in the drafting, regardless of which jurisdiction applies to the terms of the contract.  

This guide isn't your typical legal roadmap; it's designed to steer you through the labyrinth of international legal intricacies. We have distilled insights into payment term clauses, late payment penalties and the potential sanctions within each jurisdiction. Consider this your introduction that lays the groundwork for more thorough legal advice.

As the legal landscape regarding payment terms evolves, for instance with EU law changes on the horizon that will impact how payment terms in contracts relating to EU Member States must be drafted, this guide provides a helpful snapshot of the law at this current time.

For those seeking a deeper dive, connect directly with the team behind this guide or reach out to your regular DLA Piper contact.

Jurisdictions covered by the Guide
  1. Australia             
  2. Belgium               
  3. China (People's Republic of China/PRC) 
  4. Denmark
  5. France
  6. Germany
  7. Ireland
  8. Italy
  9. Hong Kong
  10. Japan
  11. Portugal
  12. Spain
  13. Sweden
  14. Switzerland
  15. The Netherlands
  16. United Arab Emirates (UAE)
  17. United Kingdom
  18. United States of America (USA) – Californian law
  19. United States of America (USA) – Federal law
  20. United States of America (USA) – New York law 

Questions answered by the Guide

1.1 Which laws regulate payment terms in business-to-business (B2B) transactions?

1.2 Is a standard payment term implied by law if a contract does not specify a payment term?

1.3 Is there a statutory maximum payment term that applies to B2B contracts?

1.4 Are there any exceptions to the applicable statutory maximum payment term?

(a) Can the invoice date or the date of receipt of the invoice be contractually agreed upon to extend the statutory maximum payment term?
(b) Can the payment term be extended by the time needed to accommodate acceptance or verification procedures relating to the delivered goods?
(c) Are there other exceptions?

1.5 Is there any special statutory framework relating to payment terms that applies to commercial transactions between businesses and public institutions?

1.6 What are the possible sanctions if a contract does not comply with the statutory maximum payment term?

1.7 Is it possible to designate another governing law to avoid an implied maximum payment term under your local laws?

1.8 Late payment penalties

(a) Is it mandatory to have to specify certain minimum late payment penalties?
(b) Is there a default late payment penalty rate?