Section 1427 ABGB: How a receipt for principal payment affects remaining interest

A receipt for payment of the principal claim can materially affect a later demand for interest. Under section 1427 of the Austrian Civil Code (ABGB), a receipt for paid principal creates a presumption that the related interest has also been paid.

This statutory presumption depends on the wording of the payment confirmation and on the actual payment. The review therefore focuses on the text, the amount paid, any reservations and the communication between the parties.

This article deals with the evidentiary effect of a receipt for principal payment. It distinguishes that effect from a waiver of debt, the first issue of a receipt under section 1426 ABGB and limitation questions.

What presumption section 1427 ABGB attaches to a receipt for principal

Section 1427 ABGB creates a specific evidentiary effect. A receipt for paid principal creates the presumption that the interest has also been paid. The rule therefore starts with a creditor statement confirming that principal payment has occurred.

The receipt does not replace a complete calculation of the claim. It changes the starting point for assessing whether interest remains due after the principal payment. The creditor must consider the statement, the amount paid and the related claim together.

The debtor should keep the original receipt. The creditor should check whether the statement accurately reflects the payment and whether the documents show a different interest position.

Which details matter in the payment confirmation

Section 1426 ABGB entitles the payer to a receipt for the obligation that has been discharged. The provision refers in particular to the names of debtor and creditor, place and time, and the subject of the discharged debt. These details help allocate the receipt for principal payment.

For a remaining-interest review, the amount paid and the claim covered by the confirmation should also be identifiable. Where several invoices, loans or partial payments exist, general wording may create new allocation questions.

The connection with an interest statement or payment plan should also be kept. A receipt should not be separated from its document and communication context where the parties discussed principal, interest and costs separately.

When a further interest demand needs review

Section 1427 ABGB speaks of a presumption. In a dispute, the documents must therefore be checked for concrete circumstances indicating a different interest position. Relevant material includes the exact receipt wording, the amount and allocation of the payment and statements made before and after payment.

An express reservation, a separate interest calculation or a clear agreement about an outstanding interest item may be important for this review. Whether such material rebuts the presumption depends on its content and its connection with the specific payment.

A later assertion alone does not explain a different interest position. Both sides should therefore present the receipt, calculation, payment reference and contemporaneous communication together.

How to allocate principal payment, interest and costs

The first review needs a timeline. It starts with the agreement or invoice, records the due date and agreed interest, captures the principal payment and leads to the issue of the receipt. Later interest statements, messages and demands follow in the same chronology.

Principal, contractual interest, default interest and costs should be listed separately. A general reference to outstanding interest does not show which period or legal basis the demand concerns.

Where there are several payments, each amount should be allocated separately. This shows whether the receipt covers full principal payment, a partial payment or a specific claim in a running balance.

Why a receipt for principal is not a general waiver of debt

The evidentiary effect of section 1427 ABGB must be distinguished from a creditor agreeing to waive a claim. The receipt first documents a payment and triggers a statutory presumption concerning interest. Its wording and context therefore remain important.

A receipt for principal payment is also different from the first issue of a receipt. Section 1426 ABGB governs the payer’s entitlement to a written certificate of the discharged obligation. Section 1427 ABGB concerns the evidentiary effect of a receipt for principal that has already been paid.

Limitation or acknowledgement questions have their own legal basis. The receipt does not answer them automatically and they should be reviewed in a separate chronology.

Which documents help review remaining interest

For an initial assessment, bring together the receipt, payment record, agreement or invoice and the complete interest statement. Letters, emails and messages exchanged before or after the principal payment are also relevant.

A clear table can list payment date, amount, recipient, payment reference, receipt wording and the interest still claimed. This separates the statutory presumption from the question of which item the creditor is specifically demanding.

The next step depends on the documents. Once principal payment, receipt and interest calculation have been allocated to one another, it is possible to assess whether clarification, an agreement or court proceedings make sense.

How the firm assesses remaining interest after principal payment

BRANDAUER Attorneys first place the agreement, principal payment, receipt and interest statement in one timeline. The review then identifies which claim the receipt covers and whether the wording contains a reservation or limitation.

Payment reference, calculation, supplementary agreements and the parties’ communication are assessed separately. This keeps the evidentiary effect of section 1427 ABGB distinct from waiver and limitation questions.

For an enquiry, the signed receipt, payment record, claim statement and relevant communication are useful. The next step can then be based on the actual documents.

Frequently asked questions about principal receipts and remaining interest