Legal term for payments in Croatia

In addition to general provisions of the Croatian Obligations Act, there are specific statutory provisions on payments terms regulated by (i) the Financial Conduct and Pre-Bankruptcy Settlement Act (Financial Conduct Act) and (ii) the Act on the Prohibition of Unfair Trading Practices in the Business-to-Business Food Supply Chain (UTP Act). Both the Financial Conduct Act and the UTP Act transpose EU Directive 2011/7/EU on combating late payments in commercial transactions into Croatian law. 

The Financial Conduct Act regulates payment terms in all commercial transactions between undertakings or between undertakings and public authorities. On the other hand, the UTP Act, as lex specialis, regulates payment terms in commercial transactions between undertakings in the food supply chain. 

Under the Financial Conduct Act, undertakings can agree on the payment term of 60 days, but if parties do not agree on a payment term, the term of 30 days shall apply. In commercial transactions between undertakings and public authorities, the parties can agree on a payment term of 30 days.

Under the Financial Conduct Act, the payment term is calculated from:

1. the date when the debtor received an invoice or another appropriate request for payment; or 
2. the date when the creditor fulfilled its obligation (a) if it is not possible to determine with certainty the date of receipt of the invoice or another appropriate request for payment, or (b) if the debtor has received an invoice or another appropriate request for payment before the creditor has fulfilled his obligation; or 
3. the day of the expiration deadline for review of the subject of obligation (in Croatian: predmet obveze), if the contract or law provides for a certain deadline for such a review, and the debtor has received an invoice or another appropriate request for payment before the expiration of that deadline.

The UTP Act sets out the maximum allowed payment deadlines depending on the type of products (i) 30 days for perishable products, and (ii) 60 days for non-perishable products. 

The calculation of the payment term under the UTP Act depends on different factors such as whether products are delivered on a regular basis or not. Accordingly, the payment term is calculated from different starting points (e.g. from delivery or the date of invoice or receipt of an invoice for deliveries, which are not conducted on a regular basis).

Under the Financial Conduct Act, as an exception, undertakings can agree on the longer payment term for a merchandise credit agreement. However, such a payment term cannot be longer than 360 days. In commercial transactions between undertakings and public authorities, the payment term can be extended up to a maximum of 60 days where objectively justified by the specific characteristics and nature of the contract.

However, the extension will be null and void if it is determined, based on the circumstances of the case, and in particular the commercial customs and the nature of the object of the obligation, that the extension has, contrary to the principle of good faith and fairness, caused obvious inequality in the rights and obligations of the undertakings.

Under the UTP Act, extension of payment beyond the standard payment terms is not possible. 

Yes. Under the Financial Conduct Act, an obligation beyond the standard payment term (i.e. the extension beyond standard term) can be evidenced in a PO under the assumption that (i) parties have agreed to such an extension, and it is in accordance with the Financial Conduct Act; and (ii) the PO is a standard contract or it refers to the framework contract containing agreed-upon terms and conditions regarding the payment term. 

As mentioned above, the UTP Act does not allow for the extension of payment beyond the standard payment terms. Consequently, an obligation beyond the standard term cannot be evidenced in a PO. 

Payment terms that are contrary to the Financial Conduct Act may be considered null and void (depending on which rules were breached). In case of breach of payment terms, an undertaking may be fined between HRK 10,000 (approximately EUR 1,331) and HRK 1 million (approximately EUR 133,124).

Under the UTP Act, a breach of payment terms is considered a severe violation of the UTP Act, and the Croatian Competition Agency can impose a monetary penalty of up to HRK 3.5 million (approximately EUR 466,000). 

There is no special legislation regarding payment obligations as described above for the COVID-19 situation. 

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