OBLIGATION TO CONSIGN CONVENTIONAL INTERESTS IN THE DOCUMENTS CONTAINING OBLIGATIONS OF PAYMENT
According to Article 1907 of the Civil Code of the Dominican Republic, the conventional interest may be greater than that established by law, if is not prohibited by law. The conventional interest rate must be set in writing.
The regulation of conventional interests is found in the Civil Code of the Dominican Republic in the article 1153 stipulates that “in obligations that are limited to the payment of a certain amount, damages and losses resulting from delay in compliance, do not consist never but in the condemnation to the interests indicated by the law; except the particular rules of commerce and finance.”
As Louis Josserand puts it, “when the debt is a sum of money, the default damages cannot be fixed freely by the parties, but only up to a limit above which would be user: the conventional rate has not been left to the free appreciation of the parties, but the legislature here makes an interventionism to protect the borrower against the demands, against the will to exploit, the money lender.
But because Article 91 of Law 183-02 dated November 21, 2002 (Monetary and Financial Law) repeals the former Executive Order No. 312 of June 1, 1919, which established a 1% monthly legal interest, the only interests to which the creditor is entitled are those conventional interests contemplated in the contract or agreement made between the parties.
In cases where interest is not conventionally stipulated, these are determined by the general index of consumer prices (or CPI) provided by the Central Bank of the Dominican Republic.
In the Monetary and Financial Code it mentions the interests in article 24 and says the following: “Monetary and financial operations will be carried out under free market conditions. The interest rates for transactions denominated in domestic and foreign currency will be freely determined among market players.”
Due to the aforementioned articles, the parties, when encountering a vacuum in the law, are obliged to stipulate the interests conventionally, since, if they don’t, they will be forced to ask the judge to include an amount in an index that complies with the damages caused by the default incurred by the debtor at the time of the fulfillment of the obligation.
Lic. Ana Pastor