Legal term for payments in Ukraine

Ukrainian payment term legislation is based on the provisions of the Civil Code of Ukraine No. 435-IV dated 16 January 2003 (the “Civil Code”), Commercial Code of Ukraine No. 436-IV dated 16 January 2003 (the “Commercial Code”), and the Law of Ukraine ”On Responsibility for Untimely Fulfilment of Money Obligations” No. 543/96-ВР dated 22 November 1996. 

While Ukrainian law sets forth general requirements for payment terms in domestic commercial contracts, it still allows parties to deviate from them or set them aside in their contracts. One of the few exceptions is a late payment interest cap, which is limited to the double discount rate established by the National Bank of Ukraine (“NBU Key Policy Rate”), which is currently 8.5%. 

No standard payment term is established by law. Parties to a contract are free to agree on any payment term, complying with the fundamental principles of Ukrainian contract law, such as good faith, equality, and reasonableness.

While there are no mandatory statutory provisions applicable to the extension of the payment term, parties to the agreement may mutually agree to amend the term of payments on a case-by-case basis. 

Yes, assuming that the PO is a standard contract or refers to the framework contract.

The debtor may be liable according to the contract, but under Ukrainian law there are no explicit provisions that provide for penalties for breach of payment terms. 

Quarantine measures established by the Cabinet of Ministers of Ukraine to prevent the spread of COVID-19 are now explicitly included in the definition of force majeure events under the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Aimed at Preventing the Occurrence and Spread of Coronavirus Disease (COVID-19)” No. 530-IX dated 17 March 2020. This means that debtors under commercial contracts may be released from liability for delayed or late payments if they prove that a breach occurred due to a force majeure event as a result of the quarantine measures.  

In commercial transactions between undertakings, the creditor is entitled to:

1. Penalty
   Penalty shall be calculated in percent from the sum of the overdue amount for each delayed day. The parties agree on the rate of the penalty to the contract, yet the legislation sets up a limitation on the rate of penalty agreed by the parties, which shall not exceed double the NBU Key Policy Rate (8.5%). According to the Commercial Code, in case the amount of penalties is not specified by law, the penalty is applied in the amount provided by the contract. If otherwise is not expressly stated in the contract or stipulated by law, the penalty shall be accrued for 6 months following the day when the payment had become due. 
2.  Inflation losses and three percent annual interest
   According to Article 625(2) of the Civil Code:

• The creditor is entitled to compensation for the inflation losses caused by the overdue. The rate of inflation shall be accrued upon the delayed amount during the whole period of the delay.
• The creditor is entitled to three percent annual interest of the delayed sum unless the agreement or the law establishes another interest. Three percent annual interest shall be accrued upon the delayed amount during the whole period of the delay.

The rate of inflation and three percent annual interest should be paid to the creditor regardless of whether it is stated in the contract. Although in practice, in Ukraine, creditors must claim a penalty (if stated by the contract) and rate of inflation and three percent annual interest against the debtor, often debtors refuse to pay these amounts voluntary, and creditors have to initiate lawsuits to collect the payments.