A reasonably large online services provider includes the following in their Terms of Use (my emphasis).

If Your credit card is declined, You agree to pay Us the fees within thirty (30) days of notification from Us, and pay (at Our discretion) a late payment charge of 1.5% per month, or the maximum permitted by law, whichever is greater.

By accepting these terms, am I accepting that they can make a late payment charge (of 1.5% per month) that is greater than the maximum permitted by law?

2 Answers 2


Terms of a contract that are opposed by a law or statute are invalid to the extent that they require a breach of said law or statute.

Thus: the maximum in law is the highest payment they can ask for, because that is by definition the highest payment they can legally expect. Stating that you must pay some arbitrary amount and maximums be damned, may be grounds for a consumer law action. However, IANAL, so specific details for your region should be discussed with someone there who is.

  • I thought the same as you, but IAANAL. I wanted to see if someone says that by accepting their terms I am accepting the possibility to pay more than the maximum permitted by law. Elsewhere in the same Terms of Use it says > By purchasing ... You are hereby waiving any and all cancellation rights under applicable laws, including but not limited to the EU Consumer Rights Directive (2011/83/EU) and/or any national laws implementing it.
    – iwbnwif
    Aug 26, 2016 at 23:31

This is a truly bizarre condition. Many states have maximum rates on loans, but this isn't a loan. But then you would have to look at the exact wording of the state's usury law. In Washington, one reads RCW 19.52. Even though the intent was to limit interest on loans, what it actually says in 19.52.020 is

(1) Any rate of interest shall be legal so long as the rate of interest does not exceed the higher of: (a) Twelve percent per annum; or (b) four percentage points above...

(complex jibber-jabber regarding T-bills omitted). However in Arizona (where LeadMD operates), ARS 44-1201(A) says

Interest on any loan, indebtedness or other obligation shall be at the rate of ten per cent per annum, unless a different rate is contracted for in writing, in which event any rate of interest may be agreed to.

which means that there is no upper limit. The maximum amount permitted by law is infinity. The state statute does not say that the 10% figure kicks in just in case a contract fails to explicitly name the numeric percentage: I'm willing to bet that the courts would disallow an infinite interest rate, as an absurdity.

Idaho repealed its usury law in 1983, so there is no upper limit and there is no "X or as stated in the contract" law in Idaho. So the maximum legal rate is infinity, the alternative rate is 1.5% per month, and infinity is greater than 1.5% per month. In this case, one could use an unconscionability argument to void the contract. In which case, the company would probably opt to interpret the limit as 1.5% per month.

  • Here's an alternative interpretation that gets to the same conclusion: Infinity is not a rate. A rate must be a finite value. There is no maximum finite value. Therefore, the 1.5% should stand.
    – user3851
    Aug 26, 2016 at 22:27
  • I really want someone to test this in Arizona.
    – user6726
    Aug 26, 2016 at 22:36
  • 1
    I agree it is a bizarre condition and your answer made me laugh, but it is not what I was looking for. Are there any circumstances when conditions in a contract can trump a related law? IMHO this is a typo and it should say "whichever is lesser" but the author is more used to writing aggressive 'greater' clauses ;)
    – iwbnwif
    Aug 26, 2016 at 23:39

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