NSW Cancellation of Gym Membership - Should I Pay Termination Fee?

[Jarrad]

-Hi, I am trying to get my gym membership cancelled, however they believe that I have to pay $235 flat fee or wait 4 weeks.
-Next I asked for a copy of my contract.
-On my contract, although I have signed the contract, under where it explains the cancellation conditions, there is a check box where it states 'I have read and understand the terms and conditions below and on the reverse. This check box has not been ticked.

My question is, because this check box isn't ticked, would this be grounds for an escape clause under contract law?

 

[Sarah J]

Hi Jarrad,

The checkbox and statement is not necessary for a contract to have been made. In every contract, even if there is no express provision that states the parties have fully read and understood the agreement, there may still be a legally enforceable contract in place. So long as the elements of a contract are in place — intention to enter into a legal relationship, offer and acceptance (agreement), consideration (money paid and services rendered) — there is a contract in place.

There are circumstances that vitiate or invalidate a contract. However, not reading or actually understanding the terms and conditions is not one of them. The test is objective and would go toward the parties' capacity to enter into an agreement. Cases where this has succeeded are those where one party does not understand any, or understand very little, English, is of low education and of very little business experience of the kind of contract entered into. In this case, the argument here is not that there is a contract that should be set aside, but that there was no contract in the first place because one of the parties had no capacity to agree and could not have held the requisite intention to enter into legal relations. It is dangerous to make "no contract" arguments because then, any obligation by any party under the contract would not exist, including your ability to enter (or have entered) the gym and use its equipment.

Having said that, you may try and lodge a dispute with the NSW Department of Fair Trading and see if you can negotiate some kind of termination procedure/policy with your gym. They have an information sheet on gym memberships. If your gym is part of Fitness Australia, you can try contracting them and asking them to resolve your dispute. If not, you can ask the Department of Fair Trading to assist you with the matter. They are a free service and are able to conciliate resolutions between consumers and businesses.

 

[DennisD]

Hi Jarrad

It's best practice for consumers to read all the fine print, and best practice for businesses to draw a consumer's attention to any especially onerous clauses, for example through bold text or a checkbox or other means

If the terms overleaf are especially onerous, these might amount to unfair contract terms. The Australian Consumer Law (the ACL, which is set out in Schedule 2 to the Competition and Consumer Act 2010 (Cth)) includes provisions which deal with unfair contract terms in consumer contracts

Your query indicates that you are in NSW, however since the ACL applies nationally it's still worth looking at the Consumer Affairs Victoria detailed information on 'Examples of unfair terms in health and fitness contracts' (goo.gl/GF4nCK). You can scroll down to 'Terms that penalise consumers for terminating memberships' and see if the relevant clause in your contract mirrors any of these examples

A practical approach might be to contact the gym, explain that the relevant terms are onerous (possibly unfair? depending on your analysis), and that yes you should have read the fine print more closely, however conversely they could have ensured that the overleaf onerous terms were actually flagged to your attention. Maybe then you can work out (no pun intended!) an outcome which you find to be more reasonable with the gym

As Sarah J outlines in more detail in the final paragraph of her response, failing that you do have the option to submit a complaint to the regulators (as many others have done in recent years in the context of gym membership contracts)

Let us know how it goes