Also known as: legal rates · lawful rate · statutory rate
Written by attorneys · grounded in primary & secondary sources — see below
The interest rate imposed as a matter of law when none is provided by contract. It supplies the default measure for prejudgment interest on monetary recoveries in contract and lease disputes and for certain statutory obligations such as pecuniary devises.
Lighthouse Shipping leased warehouse space from Lattice Systems. Lattice allowed the roof to leak repeatedly, forcing Lighthouse to incur extra storage costs over two years. After Lighthouse recovered those costs as damages, the court added interest at the legal rate for the period Lighthouse had been deprived of the funds. The addition compensated Lighthouse for the time value of the money withheld during the litigation.
Lucas Lee leased farmland to Lars Lindstrom under a 1987 agreement that contained no interest clause. After a court determined Lindstrom owed Lee a share of the profits, the court applied the legal rate of ten percent per annum to the amounts due. The statutory rate governed because the lease was silent on interest.
Select any source to read its text and confirm it supports the definition.
Interest at the legal rate is added when the tenant recovers a definite monetary loss caused by the landlord's breach. The interest compensates for the period the tenant was deprived of the funds and runs for the time appropriate under the circumstances.
No. When the lease is silent, the law supplies interest at the legal rate on the amount recovered for an appropriate period. An express contractual provision is not required.
The statutory legal rate applies. Utah Code section 15-1-1 sets the legal rate at ten percent per annum when the parties have not specified a different rate.
…Section 15-1-1 of the Utah Code states in part: “Unless parties to a lawful contract specify a different rate of interest, the legal rate of interest for the loan or forbearance of any money, goods, or chose in action shall be 10% per annum.” Utah Code Ann. § 15-1-1 (2) (1996). Because the 1987 farm lease contains no…