What is arrears?

”Arrears” is a legal concept that refers to the culpable or deliberate delay in the fulfillment of an obligation or duty.

For example, if someone owes you money and does not pay it within the agreed period, that person is in arrears and may have to compensate you for the damages they cause you.

Arrears can affect both the debtor and the creditor, depending on who is responsible for the delay.

• The debtor is in arrears when he does not fulfill the obligation in due time, unless the law or the contract requires that the creditor claim him first.
• The creditor is in arrears when it prevents or makes it difficult for the debtor to fulfill the obligation (for example, if he does not receive the thing that he must deliver or does not provide him with the means to do so).

Arrears have different consequences depending on the type of obligation and what has been agreed between the parties. Some common arrears include:

• The payment of late interest, which is an additional percentage that is added to the capital owed for each day of delay.
• Termination of the contract, which is the cancellation os it due to breach by one of the parties, with the return of what has already been delivered and the corresponding compensation.
• Forced execution, which is the fulfillment of the obligation by a third party at the debtor’s expense, or the substitution of the obligation for equivalent compensation.

Related concepts

• What could I do if I see that one of the parties has breached the provisions of the contract?