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

The following Commercial practice note provides comprehensive and up to date legal information covering:

  • Late Payment of Commercial Debts (Interest) Act 1998
  • Contracts, organisations and debts subject to LPCD(I)A 1998
  • Contracts and organisations to which the Act may apply
  • Qualifying debts
  • Conflicts of law
  • Rights under the Act
  • Calculating the statutory interest
  • The rate of statutory interest
  • The interest accrual period
  • The interest accrual period if payment date agreed in the contract (excluding payment in advance)
  • More...

The Late Payment of Commercial Debts (Interest) Act 1998 (LPCD(I)A 1998, or the Act) creates rights for businesses (and organisations in the public sector) to claim interest for late payment of commercial debts and recover reasonable debt recovery costs when each party is acting in the course of business. It also enables contractual terms that do not provide a substantial remedy for late payments to be challenged.

This Practice Note covers the following:

  1. Contracts, organisations and debts subject to the LPCD(I)A 1998

  2. Rights under the Act

  3. Calculating the statutory interest

  4. Express terms for late payment in place of statutory interest

  5. Meaning of ‘grossly unfair’

  6. Challenges by representative bodies under the Act

  7. Which version of the legislation applies?

  8. Related initiatives

LPCD(I)A 1998 (as it applies in England and Wales) has been implemented in stages via a series of commencement orders which expanded its remit and has been amended by the following statutory instruments:

  1. the Late Payment of Commercial Debts Regulations 2002, SI 2002/1674

  2. the Late Payment of Commercial Debts Regulations 2013, SI 2013/395

  3. the Late Payment of Commercial Debts (No 2) Regulations 2013, SI 2013/908

  4. the Late Payment of Commercial Debts (Amendment) Regulations 2015, SI 2015/1336

  5. the Late Payment of Commercial Debts (Amendment) Regulations 2018, SI 2018/117

For further information, see: Which version of the legislation applies?

The Department for Business Innovation & Skills (BIS) (as it was

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