As we announced in our CLI of 12 July 2023, the Law of 4 May 2023 inserted Book XIX on “Consumer Debts ” into the Code of Economic Law, which severely limits the possibility for enterprises to impose penalties on defaulting consumers.

The law stipulates that, insofar as it is provided for by agreement, the penalty clause from now on may not exceed :

• 20 EUR if the outstanding amount is less than or equal to EUR 150 ;
• 30 EUR, plus 10% of the amount due on the tranche between 150.01 EUR and EUR 500, if the outstanding amount ranges between 150.01 EUR and 500 EUR;
• 65 EUR, increased by 5% of the amount due on the tranche in excess of EUR 500, up to a maximum of EUR 2,000, if the outstanding amount exceeds 500 EUR.

In return, the legislator now authorizes enterprises to claim from defaulting consumers, whom they have contracted with, interest on arrears at a rate equivalent to that of the law of 2 August 2002 applicable to commercial transactions, increased by 8 percentage points.

At present, this interest rate is 12.5% per annum. In practice, this means that enterprises can claim arrears interest of up to 20.5% from defaulting Consumers, provided such a penalty has been agreed upon in contract.

It is now worthwhile for enterprises to adapt their general terms and conditions and their contracts to the new dispositions of Book XIX of the Code of Economic Law.

For more information on this subject, please contact Attorney Frédéric PAQUE.