- Are there any specific legal requirements in respect to payment terms?
- Is there a standard payment term set out in law? If so, what is it?
- What are the circumstances in which parties may contractually agree to extend payment beyond the standard payment term?
- May an obligation beyond the standard payment term be evidenced in a PO?
- Are there any penalties for breach of payment term in legislation other that a civil claim by the seller?
- Is there any special legislation regarding payment obligations for the COVID-19 situation?
- Any additional comments
jurisdiction
1. Are there any specific legal requirements in respect to payment terms?
Since Switzerland is not a member state of the EU, European Directive 2011/7/EU is not applicable.
Swiss law does not provide for any minimum or maximum payment terms. The general principles of contract law apply, in particular the principle of contractual freedom.
Only a contractual provision having an illegal content or violating bonos mores is inadmissible and, therefore, null and void. In particular, no person may surrender his freedom or restrict the use of it to a degree violating the law or public morals. In view of that, contractual terms must not expose a party to the arbitrariness of another person nor must they have the consequence that a party will necessarily be ruined by a commercial transaction.
There seems to be no jurisprudence in Switzerland with respect to excessive payment terms. A provision giving the purchaser free discretion as to when he will pay the purchase price would most likely be void under Swiss law. On the other hand, it seems difficult to argue that an agreement of a payment term of several months would automatically meet the above-defined threshold.
If the contractually agreed payment term is null and void in the above-discussed sense, a Swiss court would not apply the corresponding provision to the extent that it infringes mandatory Swiss law, but it will reduce the payment term to the maximum permissible duration i.e. a reduction of invalid provision to preserve validity. This is at least the case in B2B transactions.
2. Is there a standard payment term set out in law? If so, what is it?
Swiss law does not provide for any standard payment term.
If neither the contract nor the nature of the legal relationship determines the time of performance, performance may be effected and claimed immediately. Hence, in the absence of a contractually agreed payment term, a creditor may usually request immediate payment.
3. What are the circumstances in which parties may contractually agree to extend payment beyond the standard payment term?
Parties are always free to agree to extended payment terms. No specific circumstances are required for such a contractual arrangement. The only limitation is the above-discussed principle that no person may surrender his freedom or restrict the use of it to a degree violating the law or public morals.
4. May an obligation beyond the standard payment term be evidenced in a PO?
Swiss law does not require an express agreement by the parties on payments terms. Hence, parties may also imply agreement to a specific payment term.
If a supplier performs under a Purchase Order providing for a specific payment term, such behavior will usually be qualified as the implied consent of the supplier to the offered payment term.
5. Are there any penalties for breach of payment term in legislation other that a civil claim by the seller?
Since there is no specific payment term legislation in Switzerland, there is no penalty imposed for breaching such legislation.
6. Is there any special legislation regarding payment obligations for the COVID-19 situation?
We do not yet have any COVID-19 related legislation in Switzerland in respect to payment terms.
7. Any additional comments
If the debtor is in payment delay, the creditor has a right to claim statutory interest of 5%. For being in delay, the debtor must either have been served with a reminder or there must be an agreed-upon due date for the payment obligation.
