Many Ohio agribusiness firms have in the past put notations on company invoices to customers regarding the interest rate due on past due accounts. The Ohio Supreme Court on March 26, 2008, ruled that notations on invoices and account statements setting interest rates different than Ohio's statutory rate (a variable rate, which is currently 8% per annum) are not enforceable.
The case involved an Ohio agribusiness seeking to enforce its invoice terms which provided for compound interest at the rate of 24% per annum. The Court found that Ohio law requires a separate written contract and that the agribusiness did not have such a written contract with the customer. A number of Ohio courts had previously ruled that interest terms based on invoice notations were enforceable.
What this means to Ohio agribusiness and other firms intending to charge interest above the variable statutory rate on open accounts need to have a separate written agreement with their customers. Such an agreement could be in a form of a master agreement governing the parties' business arrangement, or some other written document. The bottom line is that simply notifying customers of the interest rate terms is not sufficient based on the Court's decision.
Courtesy of attorney David C. Barrett, Jr., BARRETT, EASTERDAY, CUNNINGHAM & ESELGROTH LLP