Legal Definitions - statutory rate

A statutory rate refers to a specific fee, payment, or percentage that is fixed and mandated by law, rather than being determined through negotiation or market forces. These rates are established by statutes (laws passed by a legislative body) to ensure fairness, predictability, or to regulate certain industries or transactions.

• Example 1: Music Copyright Royalties

  Imagine a popular new song that an artist wants to record and release on their album. The songwriter of the original composition is entitled to a royalty every time their song is reproduced and distributed (e.g., on CDs, vinyl, or digital downloads). In many countries, the government sets a statutory rate for these "mechanical royalties." This means that regardless of how famous the songwriter is or how much the record label makes, the songwriter receives a fixed, per-copy payment for each reproduction of their song, as determined by law, not by a private agreement between the parties.

  This illustrates the term because the amount paid to the songwriter for each reproduction is not negotiated but is a predetermined figure set by a federal statute.

• Example 2: Workers' Compensation Benefits

  Consider an employee who suffers an injury while working at a manufacturing plant. Under workers' compensation laws, they are entitled to receive benefits for lost wages and medical expenses. Many states establish a statutory rate for the maximum weekly benefit an injured worker can receive. For instance, the law might state that the weekly benefit cannot exceed two-thirds of the worker's average weekly wage, up to a certain dollar cap. This rate is not decided by the employer or the insurance company but is a legal requirement.

  This demonstrates the term as the maximum amount of compensation an injured worker can receive per week is fixed by state law, preventing arbitrary or discriminatory payouts.

• Example 3: Legal Judgment Interest Rates

  Suppose a small business successfully sues a client for unpaid services and is awarded a judgment by the court. If the client does not pay the judgment immediately, the law often allows for interest to accrue on the outstanding amount until it is paid in full. Many jurisdictions have a statutory rate for this post-judgment interest. For example, a state law might specify that all civil judgments accrue interest at a rate of 5% per annum. This rate applies automatically to the judgment debt and is not something the winning party and the losing party negotiate.

  This exemplifies the term because the percentage of interest applied to an unpaid court judgment is mandated by state statute, providing a uniform and legally enforceable rate.