Contents
- A written contract is the most reliable evidence of what you agreed, although commercial transactions do not as a rule have to be in writing (Art. 293 of the Commerce Act).
- Between businesses, the court cannot reduce an excessive penalty (Art. 309 of the Commerce Act), so it must be negotiated with particular care.
- Where no deadline has been agreed, a monetary obligation is payable within 14 days of receipt of the invoice (Art. 303a(3) of the Commerce Act).
- Statutory interest for late payment is due even without a contractual clause, and since 2026 it is calculated as the ECB rate plus 8 percentage points.
If you conclude a commercial contract without a lawyer, the most costly mistake is usually not in the text itself but in what is missing from it. The ten clauses below, covering authority to sign, subject matter, price and payment terms, time for performance, penalty, force majeure, hardship, confidentiality, termination and governing law and dispute resolution, address the most common causes of disputes between businesses in Bulgaria. In addition, even if you have not provided for it expressly, statutory interest is payable by law on late payments.
Commercial transactions are governed by the Commerce Act and, on a subsidiary basis, by the Obligations and Contracts Act. As a rule, commercial contracts do not have to be in writing (Art. 293 of the Commerce Act), unless the law expressly requires it for a particular type of transaction. A written contract is, however, the only reliable way to prove what you actually agreed if your partner stops paying or performing.
Why a Written Contract Matters
Inter-company indebtedness in Bulgaria is chronically high, and many commercial disputes are lost not because the claimant has no right, but because it has no evidence. An oral agreement can be proven in court through witnesses and circumstantial evidence (invoices, delivery and acceptance records, correspondence), but this is slow, uncertain and costly compared with a clear written contract. Each of the clauses below addresses a specific, real risk and is no mere formality.
The 10 Clauses to Check Before You Sign
1. Parties and Authority to Sign
Check the exact name, company number (UIC) and registered office of the other party, and who can actually bind it by signing. Some companies are managed by a single managing director, others by several, acting jointly or separately. If an attorney signs, ask for the original or a certified copy of the power of attorney, otherwise you risk the contract being ineffective against the company.
It is also useful to check the current status of the other party in the Commercial Register, not only whether it is active but whether it has real assets. A company with minimal registered capital may have substantial assets and sound financial statements, while a company with high capital may be heavily indebted. It is the existence, or absence, of assets that determines whether there will be anything to enforce against in a future dispute.
2. Subject Matter of the Contract
A precise and specific description of the goods, service or result, including quantity, quality, specifications and staged deadlines where applicable. A vague subject matter is one of the most common causes of disputes, because each party interprets “what we owe” differently. In a supply of goods, it is advisable also to agree when the risk passes, for example on delivery rather than on payment, and the conditions for complaints in the event of non-conformity.
3. Price and Payment Terms
In addition to the amount of the price, expressly agree the payment deadline. If you have not done so, a monetary obligation is by law payable within 14 days of receipt of an invoice or other request for payment (Art. 303a(3) of the Commerce Act). Between businesses, where several persons assume a common obligation, they are presumed to be jointly and severally liable unless the transaction provides otherwise (Art. 304 of the Commerce Act), which means the creditor may claim the entire debt from any one of them.
4. Time and Manner of Performance
Specific dates or stages of performance rather than general wording such as “within a reasonable time”. The more precise the deadline, the easier it is to prove delay in the event of non-performance.
5. Penalty
A contractual penalty secures performance and serves as pre-agreed compensation. You do not need to prove your loss in order to claim it (Art. 92 of the Obligations and Contracts Act).
Important for business owners – in civil contracts the court may reduce an excessive penalty, but between businesses in a commercial transaction this is not possible (Art. 309 of the Commerce Act).
If you have agreed a penalty of 40–50% of the value of the transaction, you will owe exactly that amount, even if it seems disproportionate. The penalty clause therefore deserves careful negotiation in both directions, as protection if you are the performing party and as a risk if you fail to perform on time.
6. Force Majeure
A party is not liable for non-performance caused by an unforeseen and unavoidable event of an extraordinary nature that occurred after the contract was concluded (Art. 306 of the Commerce Act). A mandatory condition is that the party affected by force majeure must notify the other party in writing within a reasonable time of exactly what has happened and the expected consequences for performance. The Bulgarian Chamber of Commerce and Industry publishes a model clause and issues force majeure certificates.
7. Hardship
Less well known than force majeure but equally useful – where unforeseen circumstances other than force majeure make it unfair to maintain the contract unchanged, either party may ask the court to amend or terminate it (Art. 307 of the Commerce Act). The difference from force majeure is significant. Here, performance is not objectively impossible, merely drastically disadvantageous for one party.
8. Confidentiality and Intellectual Property
Particularly important in service contracts, IT development or where the other party has access to business information. Expressly agree who owns the rights in the product, software or design created, and what data and information remain confidential after the contract ends.
9. Termination
When and how each party may terminate the contract, whether on notice, for material breach or by mutual consent. In the event of material breach, you may rescind the contract by giving the other party a reasonable additional period for performance in writing (Art. 87 of the Obligations and Contracts Act). Rescission has retroactive effect, except in contracts for periodic or continuing performance. Also beware of automatic renewal clauses. If you miss the deadline for giving notice, the contract renews without you wishing it to.
10. Governing Law and Dispute Resolution
Choose expressly whether disputes will be resolved by a court or by arbitration (for example, the Court of Arbitration at the Bulgarian Chamber of Commerce and Industry), and under which law. This is particularly important with a foreign counterparty, where there may be a dispute between Bulgarian law, foreign law or international rules such as the Vienna Convention on Contracts for the International Sale of Goods. Arbitration is faster and confidential, but the award is final and cannot be appealed on the merits.
Bonus – Statutory Interest Runs Even If You Have Not Provided for It
Even if you have not included an interest clause, interest is payable automatically on late payment (Art. 86 of the Obligations and Contracts Act), and between businesses no prior demand to the debtor is required, unlike in some civil contracts. Since 1 January 2026, following Bulgaria's accession to the euro area, the method of calculation has changed. The Bulgarian National Bank's base interest rate is no longer announced, and statutory interest on late payments is set at the European Central Bank's interest rate on its main refinancing operations (MRO) plus 8 percentage points, under a decree of the Council of Ministers adopted at the end of 2025. The MRO rate is fixed twice a year (as at 1 January and 1 July), and in mid-2026 the resulting statutory interest rate stands at around 10% per annum. If you use a contract template with interest fixed “the old way” (the Bulgarian National Bank base rate plus 10 points), it is now inaccurate and worth correcting.
Which Clauses Are Most Often Missing, and Why That Is Costly
In practice, the clauses most often omitted are not exotic ones but precisely items 5, 7 and 9 above, a penalty of a clear amount, hardship and precise termination conditions. The reason is simple. While the parties are negotiating in a good atmosphere, no one wants to “talk about divorce”. That is exactly why these clauses must be included when the contract is signed, not once relations have deteriorated, when it is too late to ask for something you did not agree at the outset.
The same applies to ready-made templates from the internet. They are generic by definition and cannot reflect the specifics of your transaction. They often contain outdated references to legislation that no longer applies, or clauses copied from a foreign legal system that have no legal effect in Bulgaria. A short review by a lawyer before signing usually costs far less than litigation afterwards.
If you already have an unpaid invoice or a contract that has not been performed, see also our debt collection service.
Frequently asked questions
Do I need a lawyer for a standard contract?
You may use a ready-made template, but it rarely reflects the specifics of the transaction and often contains outdated clauses or clauses from a foreign legal system that have no effect in Bulgaria. For a simple one-off transaction the risk may be acceptable. For recurring or higher-value transactions, a contract drafted or reviewed by a lawyer usually pays for itself in the first dispute.
What happens if my partner does not pay on time?
Once the payment deadline expires (under the contract, or 14 days under Art. 303a of the Commerce Act if nothing else was agreed), the debtor is in default and owes statutory interest without the need for a demand. For claims where the amount is not in dispute, order for payment proceedings under Art. 410 of the Civil Procedure Code are a faster route than an ordinary claim.
Can the court reduce a penalty between businesses?
No. Unlike the general rule in Art. 92(2) of the Obligations and Contracts Act, in a commercial transaction between businesses the court cannot reduce a penalty for being excessive (Art. 309 of the Commerce Act). The agreed amount is fully binding.
What is the limitation period for claims under a commercial contract?
The general limitation period is five years (Art. 110 of the Obligations and Contracts Act), and for periodic payments such as rent, subscription fees and interest it is three years. The limitation period is interrupted by the debtor's acknowledgement of the debt or by bringing a claim, including through order for payment proceedings.
