Contract lawyers in Iceland

Contract law and debt collection cover agreements between people and businesses: how contracts are formed and interpreted, what happens when one party fails to perform, the sale of goods, and the recovery of unpaid invoices and other money claims.

The legal framework

• Contracts Act No. 7/1936 (samningalög): formation of contracts, invalidity and, under its Article 36, the power to set aside unfair terms.
• Sale of Goods Act No. 50/2000 and Consumer Sales Act No. 48/2003: defects and remedies when goods are sold.
• Interest and Indexation Act No. 38/2001: late-payment interest and inflation-indexed claims.
• Debt Collection Act No. 95/2008 (innheimtulög): good practice and fee limits in debt collection.
• Limitation Act No. 150/2007: most money claims expire after four years.

When a contract is breached

If the other party does not deliver what was agreed, you can usually demand performance, withhold your own payment, ask for a price reduction, claim damages or, if the breach is serious, cancel the contract. You must complain without undue delay and preferably in writing. More in making good contracts in Iceland.

How debt collection works

Collection normally starts with a reminder and a formal payment demand (innheimtuviðvörun), followed by collection letters. If the debtor still does not pay, the creditor can bring the claim before the district court and, once it has a judgment or other enforceable title, ask the District Commissioner for enforcement (fjárnám) under the Enforcement Act No. 90/1989.

If you are the debtor and think a claim is wrong or the fees are excessive, you can dispute it. Rules on collection costs exist to protect consumers.

When to contact a contract lawyer

Involve a lawyer before you sign a contract with significant value or long duration, when a business partner fails to perform, when you need to recover a large unpaid amount, or when you receive a claim you dispute. Do not let claims sit: the four-year limitation period runs whether or not you act.