Decree 1733 of 2020 issued on December 22 regulated Law 2024 of 2020, better known as the Law of Fair Payment Terms (the “Law”). The aforementioned decree regulated the cases of exclusion from the Law; the way in which the terms for payment in fair installments must be computed; also regulated the compensation for collection costs and established the possibility for the Ministry of Commerce, Industry and Tourism to grant recognition to companies that perform payments in shorter terms than those of the Law.

Exclusion cases

The regulatory decree further regulated the cases in which the application of the Law is excluded, and are the following:

1.  Payments caused as consideration for non-commercial acts considered as such in the Commercial Code.

2.  Obligations arising from acts and contracts subject to Laws 1328 of 2009 (regulation on financial matters, insurance, securities markets) and 1480 of 2011 (Consumer Statute), and their accessory legal businesses.

3.  Obligations between large companies.

4.  Obligations contained in securities, except for invoices.

5.  Payments corresponding to compensation for damages.

6.  Payments derived from the execution of insurance contracts. The obligations derived from mutual contracts and other typical or atypical contracts where the deferred terms are specific to the essence of the respective contract.

7.  The payment of debts submitted to bankruptcy or business restructuring procedures, which are governed by its special legislation. This includes obligations subject to the insolvency regimes of a non-merchant individual and the take-over and liquidation of the Organic Statute of the Financial System.

8.  Payment of the subscribed capital in Corporations, Simplified Stock Companies and Limited Companies.

9.  Commercial operations of international trade.

It should be noted that in the case of the typical or atypical contracts referred to in literal (vi) above, the exclusion will apply as long as the parties agree on that.

Term of payment

The regulatory decree established that in the cases in which the purchaser receives the sales invoice by electronic means, payments must be made taking into account the following deadlines:

1.  In a period not exceeding 60 calendar days from the date of receipt of the invoice that meets the requirements of the Tax Statute. This deadline will apply to invoices received between January 1, 2021 and until December 31, 2021.

2.  For invoices received as of January 1, 2022, a term not exceeding 45 calendar days will be applied from the date of receipt of invoices that meet the requirements of the Tax Statute.

The aforementioned periods will begin to count with the delivery of goods or effective provision of the service, in cases where: (i) the invoice is not received by the purchaser through electronic means; or (ii) when the seller is not obliged to issue a sales invoice.

Compensation for collection costs

It was clarified that the compensation for collection costs will only be applicable to the damages caused in proportion to the sums not paid within the right time and that are different from remunerative and late interest, penalty clauses or fines. In any case, the possibility of initiating legal actions to claim payment of penalties for non-compliance is not excluded.

Recognition for the application of fair deadlines

Finally, it was established that the Ministry of Commerce, Industry and Tourism may grant recognition to companies that make payments in terms shorter than those established in the Law. The conditions, terms, deadlines and acknowledgments will be subject to the regulations issued the aforementioned ministry.

In case you have any queries, we look forward to help you.

Authors

María Alejandra de los Ríos I [email protected] I Commercial Contracts

Enrique Álvarez I [email protected] I Commercial Contracts