|The method of accruing interest under the IETA Master Agreement and the Polish Civil Code|
|Sunday, 05 July 2009 19:40|
It is because the Polish Civil Code (Act of 23 April 1964 - Dziennik Ustaw 1964, No. 16, item 93, with subsequent amendments) provides for different method for accruing interest than IETA Master Agreement (and also standard EFET and ISDA).
[...] the Delivering Party shall pay to the Receiving Party interest on an amount equal to the Contract Price multiplied by the number of Compliance Period Traded Allowances not Transferred to such Receiving Party's Holding Account by the Delivery Date for the period from (and including) the Delivery Date to (but excluding) the actual date of Transfer to the
Receiving Party at the rate specified in clause 8.5(a) (Interest)
Clause 6.1.1. of the IETA Master Agreement is cited only as an instance, because in other places in IETA (see for instance: the definition of Cost of Carry Calculation Period, the definition of Receiving Party Replacement Cost and point 8.5 (a) – relating to rules on the contract interest rate), EFET and ISDA master agreements there are analogous clauses.
“Article 111. § 1. A period of time expressed in days shall end at the end of the last day.
§ 2. If a certain event indicates the beginning of a period expressed in days, the day on which that event occurred shall not be included in the calculation of that period.
Article 112. A period expressed in weeks, months, or years shall end on the expiration of the day whose name or date corresponds to the initial day of the period, and should there be no such day in the last month, on the last day of that month.”
„In the clause 1.3. (Interpretation) the Parties agree to add the following sections:
1.3(i) Whenever this Agreement provides for charging default interest on overdue payments, default interest shall be charged from the date immediately following the Payment Due Date until the date of actual payment (inclusive).”
Making this amendment can help to avoid possible misunderstanding and disputes, when companies are establishing settlements with the Polish firm.
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