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Payment Terms Agreement

Payment Terms Agreement Template for Germany

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Key Requirements PROMPT example:

Payment Terms Agreement

"I need a Payment Terms Agreement for my manufacturing company based in Munich, establishing 45-day payment terms with our suppliers across Europe, including early payment discounts and electronic invoicing requirements."

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Document background
The Payment Terms Agreement is essential for businesses operating under German jurisdiction who need to establish clear, legally compliant payment arrangements with their commercial partners. This document is particularly relevant in scenarios involving regular commercial transactions, ongoing business relationships, or complex payment structures. It addresses key aspects such as payment deadlines, default interest, recovery costs, and electronic payment processes, all within the framework of German commercial law and EU regulations. The agreement ensures compliance with the German Civil Code (BGB), Commercial Code (HGB), and relevant EU directives while providing clarity and security for all parties involved in financial transactions.
Suggested Sections

1. Parties: Identification of the contracting parties including full legal names, registration details, and addresses

2. Background: Context of the agreement and the business relationship between the parties

3. Definitions: Definitions of key terms used throughout the agreement, including payment-related terminology

4. Payment Terms: Core payment conditions including amounts, currencies, and payment deadlines

5. Payment Methods: Accepted methods of payment, including bank transfer details, SEPA requirements, and other permitted payment channels

6. Invoice Requirements: Specifications for invoice format, content, and submission process

7. Late Payment Consequences: Default interest rates, penalties, and recovery costs in accordance with German law

8. Dispute Resolution: Procedures for handling payment disputes and discrepancies

9. Term and Termination: Duration of the agreement and conditions for termination

10. Governing Law and Jurisdiction: Specification of German law as governing law and jurisdiction for disputes

Optional Sections

1. Early Payment Discounts: Terms for early payment incentives and discount calculations

2. Credit Terms: Specific credit arrangements and credit limit provisions

3. Payment Security: Requirements for bank guarantees, letters of credit, or other security measures

4. Electronic Invoicing: Specific terms for e-invoicing processes and requirements

5. Group Company Provisions: Terms applying to affiliated companies and group-wide payment arrangements

6. Currency Exchange: Terms for handling multiple currencies and exchange rate calculations

7. Tax Provisions: Specific arrangements regarding VAT and other applicable taxes

8. Force Majeure: Provisions for payment obligations during extraordinary circumstances

Suggested Schedules

1. Schedule 1: Payment Schedule: Detailed payment timeline including specific due dates and amounts

2. Schedule 2: Bank Details: Complete banking information for all parties

3. Schedule 3: Invoice Template: Standard invoice format and required information

4. Schedule 4: Interest Calculation Method: Detailed methodology for calculating default interest

5. Appendix A: Authorized Representatives: List of persons authorized to approve payments or modify payment terms

6. Appendix B: Technical Requirements: Technical specifications for electronic payments and invoicing systems

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Banking Day
Business Day
Credit Period
Default Interest
Due Date
Early Payment Discount
Electronic Invoice
Force Majeure Event
Group Company
Interest Rate
Invoice
Late Payment
Payment Date
Payment Method
Payment Terms
Purchase Order
Recovery Costs
SEPA Direct Debit
SEPA Transfer
Settlement Period
Standard Payment Period
Statement of Account
Target2
Valid Invoice
VAT
Working Day
Parent Company
Subsidiary
Permitted Payment Method
Payment Platform
Payment Security
Credit Limit
Payment Schedule
Authorized Representative
Bank Account
Payment Currency
Exchange Rate
Payment Confirmation
Settlement Date
Relevant Industries

Manufacturing

Retail

Wholesale

Technology

Professional Services

Construction

Logistics

Healthcare

Energy

Telecommunications

Financial Services

E-commerce

Relevant Teams

Finance

Legal

Procurement

Accounts Payable

Accounts Receivable

Treasury

Commercial

Credit Control

Contract Management

Supply Chain

Relevant Roles

Chief Financial Officer

Finance Director

Accounts Receivable Manager

Credit Controller

Commercial Director

Procurement Manager

Treasury Manager

Financial Controller

Legal Counsel

Accounts Payable Manager

Contract Manager

Business Development Manager

Supply Chain Manager

Industries
German Civil Code (Bürgerliches Gesetzbuch - BGB): Primary source of German contract law, covering formation of contracts, payment obligations, default rules, and remedies for breach of contract (particularly §§ 269-271 for payment terms and §§ 286-288 for default interest)
German Commercial Code (Handelsgesetzbuch - HGB): Regulates commercial transactions between businesses, including specific provisions on payment terms and commercial customs (§§ 352-354)
EU Late Payment Directive 2011/7/EU as implemented in German law: Provides rules on payment periods in commercial transactions, default interest rates, and compensation for recovery costs
German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz - ZAG): Regulates payment services and electronic money institutions, relevant for electronic payment methods and processing
SEPA Regulation (EU) No 260/2012: Establishes technical and business requirements for credit transfers and direct debits in euros, essential for specifying payment methods
German Act Against Unfair Competition (UWG): Contains provisions regarding unfair payment terms and conditions in business relationships
German General Data Protection Regulation (DSGVO/GDPR): Relevant for handling payment-related personal data and payment information processing
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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