Court of Appeals Confirms Joint Liability of a Retailer for Using Its Trademark on a Credit Card Offered by a Finance Company

In the case "B., J. A. v. Cordial Cía. Financiera S.A. y otro s/ordinario", the Court of Appeals in Commercial Matters of the City of Buenos Aires considered that, since there was a commercial agreement by which Walmart Argentina SRL allowed Cordial Cía. Financiera to use a physical space in its stores to issue Cordial’s credit card, there was a close business relationship between them. The Court understood that, based on article 40 of the Consumer Defense Law (LDC), this close business relationship makes Walmart jointly liable for the actions of Cordial regarding the credit card agreement.

The finance company offered the plaintiff a credit card with the WALMART trademark on it. A contract was signed, but the card was not delivered to the plaintiff. After some time, the plaintiff received claims about alleged unpaid debts in favor of the finance company.

The plaintiff then requested cancelling the card, but Walmart denied the request. The plaintiff then requested a conciliation hearing before the Consumer Protection Agency, that was only attended by Cordial.

In such hearing, the plaintiff was informed there was no debt. However, a bank denied him a loan because he appeared as debtor in Veraz, a report on the credit and financial behavior of individuals and companies. For such reason, the plaintiff filed a lawsuit against Cordial and Walmart claiming compensation for breach of contract and damages.

Walmart argued it had no standing to be sued since it is a supermarket chain—not a financial entity—and therefore did not grant loans. Thus, the law on financial entities No. 21526 was not applicable. Walmart argued that it entered into a commercial agreement with Cordial only for the company to offer its financial services in the physical spaces of Walmart.

The first instance court upheld the claim and considered that the LDC, the credit card law, the rules in the Civil and Commercial Code, and the rules between private parties arising from the contract applied to the case. Regarding Walmart, the court held that articles 13 and 40 of the LDC establish strict and joint liability before the consumer of all those intervening in the chain of production of the product or service; or of those who have placed their trademark on the product or service. That is to say, those who have participated in the conception, creation, and commercialization of the service—and not only those who provide it directly—are liable for it. The court also argued that exemption from liability is extremely restrictive and does not include those part of the commercialization chain. Further, the court took into account that the WALMART trademark on the card "is part of the good faith, which is expressed in the consumer trust as a result of the advertising, corporate image, promotions, and other market configurations and practices", which guarantees the solvency, quality, seriousness, and efficiency of the company offering goods or services.

Only Walmart appealed the judgment. However, the Court of Appeals confirmed Walmart's joint liability based on the first instance decision and the evident commercial relationship between the defendants.