Major Changes in Finance Charges in Ohio
Frederick M. Luper
On March 28, 2008, the Ohio Supreme Court handed down its decision in Minster Farmers Coop. Exchange Co., Inc. v. Meyer, 117 Ohio St.3d 459, in which they held that "notations on invoices and account statements setting forth an interest rate do not constitute a "written contract" for purposes of R.C. 1343.03(A)
R.C. 1343.03(A) states that the interest rate on a book account shall be the statutory rate set forth in R.C. 5703.47 "unless a written contract provides for a different rate of interest."
In this case, Minster sent a letter to its commercial customers stating that its finance charge on delinquent accounts would increase from 1.5%/month to 2%/month commencing on a certain date. Thereafter the invoices bore the notation, "Net due last day of the month. 2% per month finance charge after 30 days."
Reversing the Common Pleas Court and the Court of Appeals, the Supreme Court held that the letter and the notation on the invoices did not constitute a "written contract." and directed Minster to charge the customer only the much lower statutory rate of interest rather than the 2%/month. It also had some interesting things to say about compound interest.
Practice pointer: If you want to charge your customers a finance charge of greater than the statutory rate, get the customer to sign an agreement saying so. For further information, consult your LNL attorney.