Non-performance of monetary obligation in Bulgaria I part

Money are due on the acquisition of certain property (goods) or against the right to the enjoyment. With the amount of money most frequently are payed the development of a chattel or provided service. Salary (remuneration) also gets money. In currency debt “convertand outstanding non-cash liabilities when seeking their realization through court. Damages from tort are evaluated and compensated with money too.

Then what are the consequences due to non-performance in accordance with Bulgarian laws?

Non-performance most often causes damages to the creditor for compensation of which the legislator should predict appropriate arrangements. The determination of compensation for the creditor of a monetary obligation is possible in two main versions:

1. By the law;

2. By agreement not forbidden by the law;

Compensation by the law

Here we can distinguish two cases:

- general rules of law

- special rules of law

Compensation in accordance with general rules

The principle of the Law of Obligations and Contracts is that to the creditor is due full compensation of the damage suffered, which are in direct consequence of the failure. In the legal doctrine it is undisputed that objective impossibility of performance of a monetary obligation is unthinkable. The genus of money could never perishes and this is explicitly enshrined in Art. 81, para. 2 of Bulgarian Law on Obligations and Contracts.

Since the implementation of the monetary obligation is always possible creditor may claim money owed (performance) together with compensation for the delay.

The latest gives rise to affirm the understanding that monetary obligation could only be delayed execution, respectively would be due only a compensation for delay. According to the general rules when claiming compensation, the creditor must prove the damage has suffered, and their size. In most cases this is associated with serious difficulties. Losses incurred, except that the creditor should to prove them, should to be identified and their causal connection with the default. Even more difficult on practice is to prove benefits lost.

To avoid such evidentiary difficulties and taking in mind the special nature of money in commodity-money relations legislator created special rules regulating relations regarding non-performance of monetary obligation.

Special rules on compensation – legal default interest

Bulgarian Law on Obligations and Contracts provides - for non-performance of monetary obligations debtor owes compensation in amount of the statutory rate from the date of the delay. For actual damages in a higher amount the creditor may claim damages under the general rules.

In Bulgaria statutory rate of interest is determined by the CabinetCurrently, legal default interest is determined by Decree № 72 of 1994 amounted to 10 percentage points above the base rate of the Bulgarian National Bank, and for liabilities in convertible currency to 10 points over three-month LIBOR for the respective currency. Such is the regulation of so called Legal default interest. It is “legal” because the law defines the conditions under which it is due, as well as its size.

Interest rates on defaults

The first prerequisite is to be due amount of money. Ain’t no matter on what grounds the debt was incurred - contract, tort, judgment and so on.

The second prerequisite is that a monetary obligation is not yet fulfilled, i. e. the debtor is in default. In art. 84 OCA defined the starting point of the delay:

1) at a fixed date for performance - with it’s expiration;

2) in the absence of agreement to date - following a call from the creditor;

3) in debt arising from tort, the debtor is deemed in default at the time of the injury, whether the creditor invited him to pay compensation or not.

In the next post we will review Compensation by agreement not forbidden by the law.

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