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By Ashby Jones
ccRecently, when we came across a restaurant in Manhattan’s Greenwich Village that had adopted a credit-card only policy, we thought it might make for an interesting little non-law related piece for the WSJ.
But of course, as it turns out, there’s a legal angle (isn’t there always)?
Let’s get to that in a minute. For now, the story. Tucked at the end of one of the shortest streets in Manhattan lies a well-regarded restaurant called Commerce, which opened early last year. On Wednesday, the restaurant adopted a new policy: it would no longer accept cash. That’s right: it’s credit and debit-cards only at Commerce, which dishes out $13 cocktails and $23 plates of spaghetti carbonara, among other fare, to its mostly well-heeled clientele.
So what’s the deal? The restaurant’s co-owner, Tony Zazula, said the convenience and security afforded by going cashless are well worth the added cost of the transaction fees imposed by card-issuing banks. Gone is the age-old restaurateur’s fear of getting robbed, either by outsiders or his own employees. “No more armored trucks,” he says.
Fair enough. But is this whole project legal? On first blush, there’s the whiff of something being illegal about it — aren’t greenbacks “legal tender” for “all debts, public and private?”
We asked Zazula about that, and he referred us to this page on the Department of Treasury’s Web site.
The applicable statute governing legal tender is Section 31 U.S.C. 5103, which states, simply: “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.”
Okay. That doesn’t sound like it works in Zazula’s favor. But Treasury explains:
There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.
Nevertheless, a reader named Justin McLachlan sent us this alternate perspective, which we considered provocative enough to put up here. Writes McLachlan:
Treasury’s interpretation is right — they’re talking about the concept known as an “offer to treat” or “offer to bargain” and generally, transactions where the obligation to pay arises and goods or services are received simultaneously. A store can forbid, say, bank notes over $50 because the person shopping there is made aware of the store’s terms before any debt is occurred. Say I want to buy a candy bar at a gas station, but I’ve only got a $100 bill. The store refuses to take it and since I’ve not yet incurred a debt with them (I haven’t eaten the candy bar), they don’t have to take my $100 and I don’t owe them any money. We simply walk away.
But in a restaurant, you usually pay after you’ve eaten the food. You’ve incurred a debt, and you’re allowed to pay for it later. It’s not always clear how much the final bill will be or what payment forms will be accepted and without putting it in writing, it’s difficult to say I knew that they wouldn’t take cash or that they don’t take Discover, etc (did I fully understand the terms of the offer?). A restaurant that allows someone to incur a debt (eat their food) and pay later becomes a creditor and would be required to accept legal tender to satisfy that debt, unless there was some offer to treat or bargain in the mix, say they explicitly told their customers — in a very noticeable way — that they would only accept credit for payment and you still decide to eat their food or they make you pay up front before you even get it.
We’re not sure if Justin’s right, but we liked how he expressed his point. In any event, the other night at Commerce, at least during the hour or so we were there, the staff members all made it very clear to patrons prior to their ordering that they weren’t accepting cash, thus, in our view, circumventing Justin’s issue.
Cashless in Manhattan: But is it Legal? - Law Blog - WSJ
That is a very odd restaurant if you ask me. To not accept cash, I can see not accepting Discover or Amex cards but cash?
I would think that if it was made known to all patrons that they do not accept cash payments, it would be legal. Can't you serve or not serve anyone? It's the owners choice right?
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