Term and Legal Significance of “Due”
Definition
The term “Due” originates from the English word “due” and is primarily used in German in legal and economic contexts. It means “due”, “payable”, or “owed”. In various areas of law, “due” is used to describe claims, receivables, deadlines, or obligations, whereby a specific legal consequence is always tied to the fact that a service is “due” or owed.
The use of “due” is mainly found in international contracts, particularly when drafting agreements with English-speaking partners or within internationally recognized contract standards (e.g., Incoterms). In these contexts, “due” typically marks a specific point in time or condition from which claims must be asserted or fulfilled.
Use and Manifestations of the Term “Due” in Law
Contract Law
In German and international contract law, “due” signifies the point at which a claim or obligation becomes payable. It marks the moment when the debtor must perform and the creditor can legally demand fulfillment.
Maturity and Default
A service becomes “due” when, according to the contract, it must be performed at a certain date, or at the latest upon the occurrence of the statutory maturity date (see §§ 271, 286 BGB). From this point, the creditor can demand performance and, if not provided, enforce consequences for default (e.g., damages, default interest). In English-language contracts, terms such as “payment due”, “due date”, or “amount due” are frequently used to mark the occurrence of the date or event of performance.
“Due on demand” and “Due diligence”
A contract may also include a clause such as “due on demand,” meaning that an obligation only becomes due upon request. In the context of corporate acquisitions, the term “due diligence” also arises, referring to a thorough review conducted before obligations are assumed.
Law of Obligations
In the law of obligations, “due” provides clarity on the point from which an owed performance can be demanded. This is of key importance in both individual contracts and continuing obligations (e.g., rental agreements, loans, service contracts). The use of “due” is decisive for payment instructions, dunning procedures, default interest, or asserting additional rights in the event of non-performance.
Special Forms in International Trade
In international commercial law, “due” is used, for example, in connection with the issuance and maturity of bills of exchange, checks, and international payment orders. Here, a distinction is made between “at sight” (due upon presentation) and “at a certain time after sight” (due at a specific time after presentation).
Corporate Law
Corporate law uses “due” especially in the context of payment obligations for capital contributions and additional funding requirements. For example, unpaid company shares become “due” when called for payment by the managing director or relevant body. Additional payment obligations can also become “due” as soon as they are demanded by a corporate resolution.
Insolvency Law
In insolvency law, the term “due” is regularly relevant in connection with the determination of insolvency. Receivables are considered “due” when they are payable, but (even after the expiration of a reasonable payment period) have not been paid. Awareness of maturity and non-performance at maturity are considered indicators of imminent or existing insolvency.
Tax Law and Fiscal Code
In tax law, the term appears in translations and international tax transactions (“tax due”, “VAT due”, etc.). It denotes taxes or dues set and to be paid at a given date. The decisive statutory provision is § 220 AO (maturity of taxes), whereby the term “due” has legal consequences for payment and liability.
Practical Examples and Typical Clauses with “Due”
Contract Clauses
The following formulations are frequently used within contracts:
- “The payment is due within 30 days after receipt of invoice.”
- “The amount due shall bear interest from the due date until payment.”
- “Installments are due quarterly in advance.”
These clauses specify from when the claim is enforceable and enable the creditor to assert their rights accordingly.
Significance in Collection Procedures
If due receivables are not paid on time, a civil claim can be enforced through reminders and, if necessary, collection measures. The legal consequence is explicitly tied to the objective occurrence of maturity (due).
Distinction and Related Terms
Difference from “payable” and “outstanding”
While “due” emphasizes maturity, “payable” stands for the general payment obligation, regardless of when it falls due. In contrast, “outstanding” refers to amounts or claims that are already open and as yet unfulfilled.
Term Variations
- “Due date”: The specific maturity date
- “Due amount”: The amount owed
- “Past due”: Overdue, that is, services not yet settled after the maturity date
Summary
The term “Due” is a common term in German and international law, broadly used to describe matured claims, obligations, and payment targets. Its application covers areas from civil contracts, to corporate law, to tax and insolvency law. The precise definition of maturity is of primary importance in every legal relationship, as significant legal consequences—ranging from claim enforcement and default interest to insolvency actions—depend on it.
In commercial and contractual practice, understanding the term “due” helps in defining payment claims securely, avoiding consequences of default, and regulating and distinguishing the enforceability of claims. Its use in international documents and regulatory frameworks stresses the need to interpret “due” precisely in the context of the specific agreement.
Frequently Asked Questions
When does a legal “Due” arise and what conditions must be met?
In a legal context, the term “Due” (derived from the English “due”, meaning “payable” or “owed”) generally refers to a matured legal claim for a performance. A Due arises whenever a contractual, legal, or other legal basis establishes an obligation and the time for performance—i.e., the so-called maturity—has arrived. Prerequisites for the existence of a Due are the existence of a valid legal relationship (e.g., purchase, service, or rental agreement), the precise determinability of the owed performance, a specifically set due date, or the objective determinability of that timing according to § 271 BGB or corresponding provisions from other laws. Additional legal questions specific to Due often arise from determining the exact point at which a claim is enforceable, such as in the context of conditions or time limits, or when contractual clauses foresee a flexible performance time (“as soon as possible”, “upon delivery”). The legal consequences are especially triggered when the debtor is in default and, if applicable, claims for damages can arise.
Which statutory provisions govern the rights and obligations related to a matured “Due”?
German civil law contains numerous provisions regulating maturity, and thus Due in the legal sense. Central is § 271 BGB (“Maturity”), which stipulates that an obligation must generally be performed immediately, unless otherwise specified. Additionally, § 280 BGB regulates claims for damages in case of breach of duty, in particular if a debtor defaults on a Due (§ 286 BGB). Other areas such as commercial law (§ 353 HGB, commercial interest), tenancy law (§ 556b BGB, rent due date), or employment law (§ 614 BGB, payment date for remuneration) also contain specific rules on maturity and the resulting claims (Due). Especially contract law also allows for individual agreements regarding maturity, whereby mandatory statutory protection provisions, such as in the context of standard terms (§§ 305 et seq. BGB), must be observed.
What are the legal consequences of non-payment of a matured “Due”?
If a matured Due is not fulfilled, the debtor is automatically in default after the expiry of any applicable grace period according to § 286 BGB, unless there are special circumstances (such as lawful retention or refusal rights). Default gives rise to various legal consequences: the creditor may claim damages for delay more easily (§ 280 para. 2 BGB), assert default interest (§ 288 BGB), and, if the performance is still not provided, sue for fulfillment or, under certain conditions, withdraw from the contract (§ 323 BGB). Stricter provisions apply in commercial law, such as a higher default interest rate between entrepreneurs. Non-payment may also have negative credit implications or even pave the way for compulsory enforcement after a successful judgment.
How are claims from a “Due” time-barred and what deadlines must be observed?
A Due is also subject to statutory limitation periods. The key provision is § 195 BGB, which generally sets a three-year limitation period for most claims. According to § 199 BGB, this period begins at the end of the year in which the claim arose and the creditor became aware of the relevant circumstances or would have become aware without gross negligence. However, there are numerous exceptions, especially in sales law (§ 438 BGB, warranty rights), contract work law (§ 634a BGB), or tenancy law (§ 548 BGB). It is especially important to note that after expiry of the limitation period, the claim from the Due can no longer be enforced by compulsion; the debtor gains a strong right to refuse performance, at which point the so-called natural obligation as a legal state arises.
How can a legal “Due” be assigned or pledged?
Under the assignment (cession) provisions of §§ 398 et seq. BGB, a matured claim, i.e., a Due, may generally be transferred to a third party unless assignment is contractually or legally prohibited (e.g., § 399 BGB). Assignment is carried out by agreement between the assignor (current creditor) and the assignee (new creditor); although maturity of the Due is not required for validity, it is often useful for enforcement. In the case of a pledge under § 1274 BGB, the Due serves as a security for a creditor; if payment fails, the creditor may, under certain conditions and in compliance with statutory seizure provisions, seek satisfaction from the claim. In both cases, all rights and obligations from the original obligation, including collateral and ancillary rights, pass to the new beneficiary.
Are there any particularities under international or European law concerning the legal “Due”?
Cross-border and European legal relations often include additional regulations. In the European context, Directive 2011/7/EU on combating late payment in commercial transactions is especially noteworthy, as it lays down minimum requirements for maturity, default interest, and lump-sum compensation, thus shaping the legal Due. In international private law, it must be determined which substantive law applies (e.g., Rome I Regulation), as this can result in different provisions on the creation, maturity, and enforceability of a Due. International commercial contracts (e.g., INCOTERMS, CISG) contain their own rules on Due. Special attention must be paid to procedural differences (limitation periods, enforcement), currency risks, and cross-border enforcement options.
What legal remedies are available in disputes regarding a “Due”?
In case of disputes over the existence, maturity, or enforceability of a Due, the entitled party generally has various legal remedies. In civil law, claims are typically enforced by way of litigation before ordinary courts (§§ 253 et seq. ZPO). In addition, a dunning procedure (§§ 688 et seq. ZPO) offers a quick, cost-effective way to obtain an enforceable title. In urgent cases, interim relief (§§ 935 et seq. ZPO) can provide protection. Arbitration and mediation offer extrajudicial alternatives and are especially significant in international contexts. Once titled (judgment, enforcement order), compulsory enforcement (§§ 704 et seq. ZPO) is possible. Creditors should always observe limitation periods and observe any statutory form requirements to preserve their rights.
