Health and fitness centres - unfair contract terms

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Consumer Affairs Victoria received a significant number of complaints about health and fitness centre membership contracts in the past.

As a result, we reviewed contracts used in this sector soon after Victoria introduced unfair contract terms laws in 2003.

We began working with Fernwood Women's Health Clubs in early 2004 and played a significant role in developing a new standard membership contract for the chain of gyms in Victoria. In mid-2005, we started targeting the health and fitness centre industry more broadly.

We sought contracts from Fitness First Australia, Genesis Health and Fitness, Lifestyle Fitness Centre, Matrix Pilates & Yoga, Ladyworks Fitness Club and Trainstation. We also approached DebitSuccess, a company providing direct debit services to health and fitness centres.

We held discussions with representatives from Fitness First, Genesis, Lifestyle and DebitSuccess to ensure unfair consumer contract terms were removed or modified. Beach House Health and Fitness Centres was added to the project in late 2006. Revised contracts have since been implemented by DebitSuccess, Genesis, Fitness First, and Beach House Health and Fitness.

Despite repeated attempts to negotiate with Craig Langley Pty Ltd (the former operator of Matrix Pilates & Yoga), the centre operator refused to modify its contracts. In keeping with our enforcement policy, the Director of Consumer Affairs made an application to the Victorian Civil and Administrative Tribunal (VCAT).

On 4 April 2008, VCAT found that Craig Langley Pty Ltd used terms in its standard membership contract that were unfair under the (then) Fair Trading Act 1999 (VCAT decision 17 March 2008). On 8 April 2008, VCAT extended the declarations to the new owners of Matrix Pilates & Yoga Pty Ltd from 8 May 2008.

During the hearing, it became apparent that the new owners had signed up consumers on new contracts. We reviewed these and found terms that we considered unfair or not clearly expressed. The proceeding was then amended to include the new consumer contracts and a further hearing took place on 26 June 2008.

A number of terms in the new contracts were declared to be unfair or not clearly expressed in orders handed down on 24 July 2008 (VCAT decision 14 July 2008). This means these terms were treated as though they never existed.

Trainstation were also unwilling to engage with us about their contracts. We applied to VCAT and the matter was heard in August 2008.

On 24 October 2008, VCAT found:

  • Trainstation Health Clubs Pty Ltd used a number of terms in its standard membership contracts which were unfair under the (then) Fair Trading Act 1999
  • a number of terms were not clearly expressed, contrary to the (then) Fair Trading Act 1999 (VCAT decision 24 October 2008).

Suppliers should ensure their contracts do not contain any of the following contract terms, which Consumer Affairs Victoria considers unfair. These are terms that:

Examples of unfair terms in health and fitness contracts

Terms that result in the automatic renewal of memberships

"After the initial period of ___ fortnightly payments, I understand the debit will continue past the minimum term specified in this agreement until I give the Company four weeks written notice from my next debit, of my intent to end my membership."

Terms that allow the health and fitness centre to vary any or all of the aspects of the services it provides

"Management reserves the right to alter the length of the membership or cancel it completely, without notice, if a member fails to complete payment."

"Management reserves the right to:

  • suspend or expel without refund any person whose conduct is deemed improper or in any way detrimental to the Centre
  • close off any part of the premises or any piece of equipment for maintenance (or for any reason) at any time. The centre will not be held responsible or liable for such occurrences.
  • regulate the hours of opening and closing in accordance with the requirements of the centre.
  • amend any fees or charges without notice.
  • alter class timetable without notice.
  • change the Centre rules without notice."

"Membership types and categories may change from time to time at the sole discretion of management."

"The Company reserves the right to alter rules and regulations at its sole discretion."

"Change of location of the Club within 12 kilometres, or change of name of the Club, or change of name of the Operator, or change of ownership of the Operator, or change of ownership of the Club, does not absolve the Customer, in any way at all, from honouring the terms of this Contract."

Terms that make it difficult for consumers to terminate memberships

“You can terminate your monthly deduction at any time, with a minimum notice of 30 days, by completing in person, by appointment, the X cancellation notice…"

“At the time of lodgement of the cancellation form, your membership fees must be paid up to date. So there can be no mistake, for your membership cancellation to be effective, all your membership fees must be paid up to date and on the date you give notice AND you must pay or make satisfactory arrangements to pay all membership fees for the period from the date of notice until the date it takes effect. Should you have outstanding fees, your cancellation will not be processed and you will have to reapply to cancel in writing once payment is up to date."

Terms that penalise consumers for terminating memberships

“Any obligation to a minimum agreement period must be honoured in full... Memberships may only be cancelled after the minimum agreement period.”

“Where a minimum term membership has been entered into, cancellation can only occur after the minimum term has expired or the minimum term payment has been paid out in full.”

“The Customer may terminate this Contract on or after the expiry of the minimum term, provided that all instalments and fees due up to the date of termination are paid, by provision of one full calendar month notice in writing.”

Terms that penalise consumers for breach of contract

"Default in payment of any agreed payment terms, either by part payment or direct debit, renders the full amount of any outstanding monies due and payable immediately.”

“In the event that the member does not pay the amount payable under this Agreement within 32 calendar days of the due date as expressed to the left on the Agreement, the Club and the Billing Agent may at their discretion terminate the Membership and this Agreement. Upon such termination of the Agreement, all amounts outstanding shall become immediately due and payable without further written notice of demand.”

“The Customer acknowledges that in the event of more than three missed or overdue payments within the minimum term the full outstanding balance – including late payment fees, bank and legal fees – for the remainder of the minimum term shall, at the sole discretion of the Operator, be immediately due in full, and the Operator shall be entitled to terminate the contract forthwith without notice to the Customer. The Customer authorizes payment of the full outstanding balance (including late payment fees) under this clause by Direct Debit from the Customer’s bank account or by charge to the Customer’s credit card.”

Other

"Whilst on the Operator’s premises both my property and my person shall be at my own risk and I will not hold the Operator or instructors liable for personal injury or loss of property whether caused by negligence of the Operator, its employees or its agents, or otherwise."

"I, and if being a minor, my parent/s, guardian/s for and on behalf of myself, acknowledge that during such times as I am present on the premises of or included in any activity external to the premises which is organised, approved or endorsed by the Centre as an activity for me to take part in, both my property and person shall be at my own risk and I will not hold the Centre liable for any personal injury or loss of property which may arise from the negligence of the Centre, its servants, agents, independent contractors, voluntary workers, other users of the facility or participants in the activities or spectators or other parties providing services through or in the facilities of the Centre.”

“Assumption of Risk - The use of facilities at X naturally involves the risk of injury to you or your guest whether you or someone else cause it. As such, you understand and voluntarily accept this risk and agree that X will not be liable for any injury whatsoever including without limitation, personal bodily, or mental injury, economic loss or any damage to you, your spouse, partner, guest, unborn child or relatives from the negligence or other acts or agree to indemnify X against any claim whatsoever including legal costs commenced by yourself or other parties referred to above as a result of the use of the facilities at X.”

“As such, you understand and voluntarily…agree to indemnify X against any claim whatsoever including legal costs commenced by yourself or other parties referred to above as a result of the use of the facilities at X.”

“Lockers are available for use in some facilities. All care is taken, however the centre does not accept responsibility for items, which are lost/stolen from lockers. Bags are not permitted in the health club except to be placed in lockers provided.”

“X is not liable to you or your guest for any articles including a motor vehicle or its contents that are damaged, lost or stolen while on or around X’s premises.”

“Representation – You represent that you are in good physical condition and have no complaint, impairment or disability that may prevent you from using all of X’s facilities. As such you acknowledge that X did not give you medical advice before you joined, and cannot give you any after you join, relating to your physical condition and ability to use the facilities. If you have any health or medical concerns now or after you join, discuss them with your doctor before using the facilities.”

“Before signing this document I have read and understood it and how it affects my legal rights.”

“By signing this Application and Agreement you consent to use using your image in any promotion or other material in relation to the business."

“The Membership Agreement together with the Membership Terms and Conditions Schedule, the Privacy Statement and the Direct Debit Service Agreement constitutes the entire agreement, understanding and arrangement (express or implied) between the Customer and the Operator relating to the subject matter of this Contract and supersedes and cancels any previous agreement, understanding and arrangement relating thereto whether written or oral.”

Acceptable limitations of liability

Businesses can limit their liability under consumer law for death or personal injury, as long as they notify consumers of any limitation before they agree to buy the services.

From 1 July 2012, businesses wishing to limit their liability for the first time must use the wording set out on our Recreational businesses - wording to limit liability for death or personal injury page.

Existing notices using the wording set by previous legislation remain valid, but businesses are encouraged to switch to the new wording as soon as possible.

Last updated: 17/09/2014

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