Citation, commencement and extent

1. —(1) These Regulations may be cited as the Late Payment of Commercial Debts Regulations 2002 and shall come into force on 7th August 2002.

(2) These Regulations extend to England and Wales and Northern Ireland .

Amendments of the Late Payment of Commercial Debts (Interest) Act 1998

2. —(1)The Late Payment of Commercial Debts (Interest) Act 1998 shall be amended as follows.

(2) Section 2(5)(c) and (6) (the Secretary of State’s power to specify by order categories of contracts as excepted contracts) are repealed.

(3) Section 3(4) and (5) (debts not to carry statutory interest if specified in an order made by the Secretary of State) are repealed.

(4) After section 5, there shall be inserted the following section—

“ 5A. Compensation arising out of late payment

(1) Once statutory interest begins to run in relation to a qualifying debt, the supplier shall be entitled to a fixed sum (in addition to the statutory interest on the debt).

(2) That sum shall be—

(a) for a debt less than £1,000, the sum of £40;

(b) for a debt of £1,000 or more, but less than £10,000, the sum of £70;

(c) for a debt of £10,000 or more, the sum of £100.

(3) The obligation to pay an additional fixed sum under this section in respect of a qualifying debt shall be treated as part of the term implied by section 1(1) in the contract creating the debt. ”

Proceedings restraining grossly unfair terms or practices

3.—(1) In this regulation, “representative body” means an organisation established to represent the collective interests of any enterprise, either in general or in a particular sector or area.

(2) Paragraph (3) applies where a person acting in the course of a business enters (or intends to enter) as purchaser into a contract to which the Late Payment of Commercial Debts (Interest) Act 1998 applies.

(3) On the application of a representative body, the High Court may grant an injunction on such terms as it thinks fit restraining the person from relying on a term in the contract, or engaging in a practice in relation to the contract, where that term or practice relates to—

(a) the date or period for payment of a debt;

(b) the right to interest for late payment of a debt; or

(c) compensation arising out of late payment of a debt;

and in all the circumstances of the case that term or practice appears to the High Court to be grossly unfair.

Revocation

4.The Late Payment of Commercial Debts (Interest) (Legal Aid Exceptions) Order 1998 is hereby revoked.

Saving for existing contracts

5. These Regulations do not affect contracts made before 7th August 2002.

Review

6.—(1) Before 26th February 2022, and subsequently at intervals not exceeding five years, the Secretary of State must—

(a) carry out a review of regulation 3;

(b) set out the conclusions of the review in a report; and

(c) publish the report.

(2) In carrying out the review the Secretary of State must, so far as is reasonable, have regard to how Article 7(5) of Directive 2011/7/EU of the European Parliament and of the Council of 16th February 2011 on combating late payment in commercial transactions is implemented in other member States.

(3) The report must in particular—

(a) set out the objectives intended to be achieved by regulation 3;

(b) assess the extent to which those objectives are achieved; and

(c) assess whether those objectives remain appropriate and, if so, the extent to which they could be achieved with a system that imposes less regulation.