Health and fitness centres - unfair contract terms

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Health and fitness centres generally use standard form consumer contracts- that is, contracts prepared by the business and offered on a 'take it or leave it' basis.

Under the Australian Consumer Law (ACL), a term in a standard form contract may be declared unfair if it:

  • would cause a significant imbalance in the parties' rights and obligations under the contract
  • is not reasonably necessary to protect the business
  • would cause detriment (financial or otherwise) to a consumer.

The ACL bans businesses from proposing, using, or relying on unfair contract terms in standard form contracts with consumers and small businesses. Penalties can be as high as:

  • $50 million for businesses
  • $2.5 million for individuals.

All businesses, including health and fitness centres, should ensure their contracts comply with unfair contract terms laws.

We have worked with health and fitness centres to remove or modify unfair consumer contract terms, including terms that:

  • resulted in the automatic renewal of memberships without the opportunity to cancel at the conclusion of a minimum term
  • allowed the health and fitness centre to vary its services without notice
  • penalised consumers for terminating memberships
  • penalised consumers for breach of contract.

Contracts that include such terms are not automatically considered unfair, as only a court or tribunal can decide this.

We continue to engage with businesses to ensure their contracts comply with the law. If a business refuses to modify its contracts, we may take further action such as applying to the Victorian Civil and Administrative Tribunal (VCAT) for orders. 

Consumers may also take their own action at VCAT or in a court if they believe a term to be unfair. If the contract terms are found to be unfair and void, those terms are treated as though they never existed. If the contract can operate without the unfair term, it will still be binding.

Acceptable limitations of liability

Recreational businesses, including health and fitness centres, 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.

Businesses wishing to limit their liability for the first time must use the wording set out on Recreational businesses - wording to limit liability for death or personal injury.