Opinion ID: 2303411
Heading Depth: 3
Heading Rank: 1

Heading: Service Charge v. Interest

Text: As a preliminary matter, we address certain issues regarding the terminology used by the parties in the instant case. As part of our task involves the interpretation of the relevant agreements, we note that, when interpreting the language of a contract, this Court's goal is to ascertain the intent of the parties and give it effect. LJL Transport., Inc. v. Pilot Air Freight Corp., 599 Pa. 546, 559, 962 A.2d 639, 647 (2009). When the words of a contract are clear and unambiguous, the intent of the parties must be ascertained from the language employed in the contract, which shall be given its commonly accepted and plain meaning. Id. As noted above, the Retail Member Agreement provides for payment of a 1.5% monthly service charge by MTS on its past-due balances. MTS contends this service charge is distinct from interest, and, as a result, if we conclude that TruServ is entitled to interest, it cannot exceed the statutory prejudgment interest rate of 6% per annum. We do not agree. A service charge is defined as, inter alia, charges payable by the buyer and imposed by the seller as an incident to the extension of credit. Black's Law Dictionary 1400 (8th ed.1999). Similarly, interest is defined as, inter alia, compensation fixed by agreement or allowed by law for the use or detention of money, or for the loss of money by one who is entitled to its use. Id. at 829. However, where a note does not carry interest until after maturity and default, such interest is not a charge for the extension of time for payment, but a charge in event of default in payment. 47 C.J.S. Interest and Usury § 428. In the instant case, the service charge, as described in the Retail Member Agreement, is not a charge or fee that MTS was required to pay in exchange for its ability to purchase items on credit. Rather, the service charge consisted of a calculated percentage of the past-due balance balances of accounts. If MTS paid its balance in full by the date payment was due, no service charge was incurred, and MTS could continue to purchase items on credit. Under these circumstances, we conclude the term service charge, as used in the Retail Member Agreement, simply means interest, and we reject MTS' suggestion that the use of the term service charge in the Retail Member Agreement precludes TruServ's recovery of interest at a rate greater than the statutory prejudgment interest rate of 6% per annum.