The contractual interest rate prevails over the legal interest rate before judgment | Schlam Stone & Dolan LLP
On March 2, 2022, Judge Andrea Masley of the New York County Commercial Division issued a decision in BNP Paribas, Singapore branch v. Natixis, NY branch2022 NY Slip Op. 30679(U), stating that a contractual agreement regarding the rate of interest to be paid by the defendant will control the New York statutory rate of 9% for prejudgment interest, explaining:
“New York courts have long held that where an agreement involving debt “provides that interest will be at a specified rate until the principal is paid, then the contract rate will prevail until the principal is paid, or until the contract is merged with a judgment. In other words, when the principal of a loan is due on a certain date and the debtor does not make the payment, the interest rate of the contract will be used to calculate the interest on the unpaid principal from the date of payment. maturity of the loan until entry Thus, the inclusion of a clause stipulating that interest accrues at a [*4] rate “until principal is paid” (or words to that effect) changes the general rule that interest on principal is calculated in accordance with the New York statutory rate of interest after maturity of the loan or default of the debtor”.
(NML Capital v. Argentine Republic, 17 NY3d 250, 258-259, 952 NE2d 482, 928 NYS2d 666  [citations omitted].) The interest referred to in the SBLC was due from February 20, 2020 until the date defendant made payment, which was to occur within three business days of plaintiff’s request. The defendant did not pay the full amount due. Thus, interest continued to accrue at the rate prescribed by the SBLC. All other arguments have been considered and are without merit.
New York courts impose a statutory prejudgment interest rate of 9%. But as this case shows, if the parties agree on a different number (lower or, subject to usury laws, higher), that rate will control the statutory rate.