Key Payment Terms in Procurement Law 2026 – Due Date and Default

Key payment terms: payment periods, due dates and default rules in public contracts. Legal basis and obligations of contracting authorities.

Definition: Key payment terms are the provisions laid down in a public contract on payment periods, due dates, payment modalities and consequences of default, determined both by general civil law (§§ 286 et seq. BGB, Late Payment Directive) and by procurement law requirements.

Last updated: January 2026 · Legal basis: § 132 GWB (contract modifications), Directive 2011/7/EU (late payment), BGB §§ 286–288, VOB/B § 16

What are key payment terms?

Payment terms are a central element of every public contract and govern when, how and in what form the contracting authority must pay the agreed remuneration to the contractor. In the procurement law context, payment terms have a dual relevance: on the one hand, they form part of the contractual terms laid down in the procurement documents; on the other, material changes to payment terms after contract conclusion are subject to the strict limits of § 132 GWB.

Statutory payment periods

The EU Late Payment Directive (2011/7/EU) and its German implementation set clear parameters for payment periods owed by public contracting authorities. Public contracting authorities must in principle settle invoices within 30 days of receipt of the invoice (§ 271a BGB). An extension to up to 60 days is permitted only exceptionally and where objectively justified. Payment periods exceeding 60 days are generally invalid for public contracting authorities and cannot be agreed.

Due dates and acceptance

The due date for payment claims arising from public contracts depends on the type of contract:

Works contracts (VOB/B): final payment is due 30 days after receipt of invoice, which is triggered no earlier than acceptance of the works (§ 16(3) VOB/B)
Supply and service contracts: due 30 days after receipt of invoice, provided that delivery or performance has been properly carried out
Interim payments: due within 21 days of receipt of invoice (§ 16(1) VOB/B)

Default and default interest

If a public contracting authority fails to pay on time, it falls into default (§ 286 BGB) and is liable to pay default interest. The default interest rate for claims not involving a consumer is 9 percentage points above the base rate (§ 288(2) BGB). In addition, the contractor is entitled to compensation for default losses and a flat-rate amount of EUR 40 (§ 288(5) BGB) as a contribution to recovery costs.

Materiality of changes to payment terms

In the procurement law context, the question of when a change to payment terms after contract conclusion constitutes a material contract amendment triggering a fresh tendering obligation (§ 132 GWB, Art. 72 Directive 2014/24/EU) is significant. A change is material if it:

Shifts the economic balance of the contract in favour of the contractor
Materially extends the subject of the contract
Would have changed the competitive situation had it been known from the outset

A mere deferral or minor postponement of payment dates is generally not a material change. The agreement of fundamentally different payment modalities (e.g. performance-based payment instead of a fixed price) can, however, be material.

Special requirements for advance payments

Advance payments to contractors before performance are subject to particularly strict rules for public contracting authorities, as they entail an increased default risk for the public purse. Advance payments require an express legal basis (e.g. budget law authorisation) and must be secured by guarantees or other security.

FAQ

May a public contracting authority agree payment periods exceeding 60 days? No, payment periods exceeding 60 days are impermissible for public contracting authorities under § 271a BGB and the EU Late Payment Directive and are invalid, even if agreed contractually.

What can a contractor do if the public contracting authority does not pay? The contractor can first send a reminder to trigger default (although default also occurs without reminder where payment periods apply) and then claim default interest. If payment remains outstanding, dunning proceedings or actions for payment may follow. In construction, § 16(5) VOB/B provides a right of suspension where interim payments are not made.

Do the payment periods also apply to subcontractors? The statutory payment periods apply directly to the contracting authority–contractor relationship. The Late Payment Directive (Directive 2011/7/EU) also applies between contractor and subcontractor, since subcontractors are not consumers.

Last updated: January 2026 All information without warranty. For legally binding advice, please consult a law firm specialising in procurement law.