42 3 Reduction of External Funding Needs
the law on retention of title clauses,^76 and forces Member States to ensure that
there is a fast recovery procedure for unchallenged claims.^77 The creditor is also
entitled to reasonable compensation for recovery costs without prejudice to na-
tional provisions according to which a national judge can award to the creditor any
additional damage caused by the debtor’s late payment.^78
The Directive both requires legal rules on the obligation to pay interest after
due date^79 and prohibits certain ways to abuse the freedom of contract to the det-
riment of the creditor.^80 An agreement on the date for payment or on the conse-
quences of late payment which is not in line with the statutory default provisions
either is not enforceable or gives rise to a claim for damages; this applies where
the agreement is grossly unfair to the creditor when all circumstances of the case,
including good commercial practice and the nature of the product, are considered.
The firm may thus not abuse its strong bargaining position, if it has one. Two
examples have been mentioned in the Directive: “where an agreement mainly
serves the purpose of procuring the debtor additional liquidity at the expense of
the creditor, or where the main contractor imposes on his suppliers and subcon-
tractors terms of payment which are not justified on the grounds of the terms
granted to himself, these may be considered to be factors constituting such an
abuse.”^81
The Directive on combating late payment in commercial transactions is com-
plemented by two regulations that make it easier for the supplier to collect its
claims from the firm.
Regulation 805/2004 creates a European enforcement order for uncontested
claims. The Regulation applies in civil and commercial matters.^82 The purpose of
this Regulation is “to create a European Enforcement Order for uncontested
claims to permit, by laying down minimum standards, the free circulation of
judgments, court settlements and authentic instruments throughout all Member
States without any intermediate proceedings needing to be brought in the Member
State of enforcement prior to recognition and enforcement”.^83
Regulation 1896/2006 creates a simplified system for collecting uncontested
debts between Member States. This Regulation applies to civil and commercial
matters in cross-border cases.^84 The purpose of the Regulation is “to simplify,
speed up and reduce the costs of litigation in cross-border cases concerning uncon-
tested pecuniary claims by creating a European order for payment procedure”^85
and “to permit the free circulation of European orders for payment throughout the
Member States by laying down minimum standards, compliance with which ren-
(^76) Article 4 of Directive 2000/35/EC (Late Payment Directive).
(^77) Article 5 of Directive 2000/35/EC (Late Payment Directive).
(^78) Recitals 16–17 of Directive 2000/35/EC (Late Payment Directive).
(^79) Article 3(1) of Directive 2000/35/EC (Late Payment Directive).
(^80) Article 3(3) of Directive 2000/35/EC (Late Payment Directive).
(^81) Recital 19 of Directive 2000/35/EC (Late Payment Directive).
(^82) Article 2 of Regulation 805/2004.
(^83) Article 1 of Regulation 805/2004.
(^84) Article 2(1) of Regulation 1896/2006.
(^85) Article 1(1)(a) of Regulation 1896/2006.