[QUOTE=Small British Shop Owner]
The contract would not be enforceable in the UK because that portion would be held to be unfair (in part because of the relative sizes/power of the two parties). It would suprise me if the situation was different in the US as both follow the common law tradition. Pure speculation: This could be a reason Visa doesn’t seem to be enforcing it.
[/QUOTE]
I have no idea whether or not there is a provision in VISA-retailer contracts in England that prohibit the retailer adding a fee to VISA transactions. That being said, you have put out that if there were such a term, it would not be enforceable, and to support this, you have referred to Yianni.
When someone seeks damages for negligence, that person must first prove that there was a duty of care owed by the negligent party to the injured party. Yianni stands for the proposition that if the injured party had reasonably relied on the negligent party, that is sufficient to establish a duty of care, even if there was no contract between the two.
That simply is not relevant to the discussion at hand, which questions whether or not terms in the VISA – Retailer contract that require that VISA be accepted for all transactions should be void or voidable. If you think it is relevant, please provide us with your reasoning.
I suggest that you might have better luck at starting with a general decision on equality of bargaining powers, look at the concepts upon which it is based, and apply those concepts to your matter at hand with VISA. For example, start with the long established premise that there should be freedom to bargain, and then apply Lord Denning’s sympathetic-to-the-litle-guy reasoning in Lloyds Bank v Bundy [1975] Q.B. 326, 336: “There are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms – when one is so strong in bargaining power and the other so weak – that, as a matter of common fairness it is not right that the strong should be allowed to push the weak to the wall.”
What, I ask, is fundamentally unequal in the bargaining powers between small retailers and VISA?
Yes, individual retailers are much smaller than the giant VISA, but if retailers do not like VISA’s terms they can use any number of other forms of payment: cash, cheque, money order, debit card, credit card (any one of hundreds other than VISA), or IOU written on the back of a handkerchief.
Small retailers also have the ability to price their goods, so as to absorb any VISA transaction costs into the price of a particular good, or into the price of goods overall at the store (and bear in mind that if there were no base VISA transaction fee, there would simply be a higher VISA percentage fee).
Small retailers are experienced business persons, who should know whether a deal with VISA is good for them or bad for them, and who also should be experienced enough to realize that even if an overall contract is favourable to them, not all of the individual terms may favourable. Small retailers contracting with VISA are experienced business persons, not poor naïve consumers.
VISA offers its customers acceptance of its card for all purchases at contracting retailers, and it processes each transaction based on a flat fee plus percentage. If this is too expensive for a retailer, then the retailer is free to not contact with VISA. If enough small retailers start dumping VISA, then VISA will adjust its rates, or simply continue on without that section of the market.
Let’s look at it another way. Let’s say that I, a humble tourist, happen upon your shop. I see something I like, but it is too expensive for me. Are you obligated to sell it to me at my price, or are you free to bargain or to hold to your price, despite you being an experienced business person and me being only a naïve tourist, entirely out of my element, not even knowing the difference between a pence and a dollar, or the consumer protection / sale of goods laws of England, or the customary practices of trading in small shops?
Or let’s look at it yet another way. Should VISA be able to unilaterally refuse to handle transactions that it does not think are profitable for it, despite having contracted with small retailers to handle all transactions?
I expect that if both parties are experienced business persons, and know exactly what they are getting into before making the contract, then the courts would be very hesitant to disturb the contract simply because one side got a better deal out of it than the other, or one element of the contract cost one party or the other some expense. In short, it is up to the courts to ensure that the negotiations that led to the bargain were fair, but it is up to the parties to decide for themselves that the bargain is fair.
