Kentucky Amends Provisions Regarding Contract Obligations and Interest Rates
The Commonwealth of Kentucky amended its provisions relating to contracts; when parties are bound to the interest rate in a contract and the interest rate parties are entitled to receive after default. These provisions are effective on July 12, 2018 (or 90 days following adjournment of the current legislative session).
Any party to a contract governed by Kentucky Revised Statutes 360.010(1) is bound to the interest rate as it is expressed in the agreement (K.R.S. 360.010(2)). The party entitled to be compensated interest after default at the rate of interest as is expressed in the contract or obligation prior to the default. If the interest rate expressed in the agreement is a variable rate, then the rate from default to judgment is calculated and adjusted according to the terms of the agreement (K.R.S. 360.010(3)). If the agreement does not contain a rate of interest, then the party entitled to be paid will receive interest, from default to judgment, at the legal rate of interest (K.R.S. 360.010(4)).
A new section of Kentucky Revised Statutes Chapter 371 is created as part of these amendments. This new section states that the obligation of an obligor to pay a debt is not extinguished by any action taken by an obligee; an obligee has the right to maintain its own records and may consider the obligation as not collectible, but this will not remove the obligation from the obligor’s responsibilities (K.R.S. 371(1)). The obligor maintains the right to prove that it has fully or partially paid the obligation in accordance with the terms of the agreement (K.R.S. 371(2)).
The full text of these amendments can be found here: http://www.lrc.ky.gov/recorddocuments/bill/18RS/HB369/orig_bill.pdf
Comments are closed.