If you have agreed to deliver goods or services to a business that turns out to be unable to pay, you are not always obliged to deliver first and then become an ordinary creditor. The Satisfaction of Claims Act (dekningsloven) chapter 7 gives the other party to a mutual contract certain protections. This article is written for suppliers and other contract parties whose counterparty cannot pay.
The rule in Section 7-2
Under Section 7-2 of the Satisfaction of Claims Act (dekningsloven), if it turns out that the debtor lacks the funds to perform its part of a mutual contract on time, the other party may:
withhold its own performance, or
if the performance has already been dispatched from the place of delivery, prevent it from being handed over to the debtor or the debtor’s estate,
until security is provided for the debtor’s counter-performance. This applies even if the time for the debtor’s performance has not yet come.
The rules in chapter 7 apply unless other statutory provisions or the nature of the legal relationship indicate otherwise (Section 7-1).
Conditions
A mutual contract. Both parties must have obligations under the contract (gjensidig tyngende avtale), for example a sale or a service contract.
The debtor lacks funds. It must appear that the debtor cannot perform on time. Bankruptcy does not need to have been opened.
Your performance has not been handed over. The right is to withhold, or to stop delivery before hand-over. Once the performance has been handed over to the debtor, Section 7-2 no longer helps.
Goods in transit
For sales of goods, Section 61 of the Sale of Goods Act (kjøpsloven) has a similar rule. If the seller has already sent the goods and the buyer’s creditworthiness fails seriously, the seller may prevent the goods from being handed over to the buyer or the buyer’s estate, even if the buyer has received the transport document. The seller must notify the buyer immediately. If notice is not given, the seller may be liable for loss that could have been avoided.
If bankruptcy is opened: the estate’s choice
The bankruptcy estate has the right to step into the debtor’s mutual contracts. The other party can demand that the estate decides without undue delay whether it will do so (Section 7-3). A contract term that gives the other party a wider right to terminate because of the debtor’s insolvency is not binding on the estate.
If the estate steps in, it is bound by the contract terms, and the other party’s claim is covered as an estate claim (massefordring) (Section 7-4).
The other party can demand that the estate performs, or provides security, when performance is due (Section 7-5).
The right to terminate
If the estate does not step into the contract, or does not perform or provide security under Section 7-5, the other party may terminate the contract (Section 7-7). If the other party had already delivered all or part of its performance before the proceedings were opened, it may only terminate for the delivered part if it had made a valid reservation of the right to recover the performance, or if the performance was a money payment. A claim for repayment of money because of termination is only covered by dividend.
Practical points
Check the counterparty’s ability to pay before you deliver, especially in long-term contracts.
If you hold back a delivery, document why and notify the counterparty.
Consider agreeing on security or a valid retention of title before delivery.
If the counterparty is already in bankruptcy, ask the trustee (bostyrer) in writing whether the estate will step into the contract.
Related reading
How we can help
Advokatfirmaet Sterk AS (org. no. 931 556 584, St. Olavs plass 3, 0165 Oslo, advokats.no) advises businesses on customers or suppliers who cannot pay, including withholding performance, demanding security and termination. If you would like us to look at your situation, you can contact us. Information about our fees is available at advokats.no/priser.
This article provides general information as of 29 October 2026 and is not legal advice for your specific situation.
