Gym cancelation debt was penalty rules judge

arcon5

unholyangel wrote: »

Fairness requires that the substance of contract terms, not just their
form and the way they are used, shows due regard for the legitimate
interests of consumers. Therefore a term may be clear as to what the
consumer has to pay, but yet be unfair if it amounts to a 'disguised
penalty', that is, a term calculated to make consumers pay excessively for
doing something that would normally be a breach of contract


5.8 Disguised penalties. Objections under the Regulations to an unfair financial
penalty can apply to any term which requires excessive payment in the
event of early termination, or for doing anything else that the supplier has
an interest in deterring the consumer from doing. This includes terms in
contracts under which consumers agree to make regular payments for
services provided over a period of months or years, which state that they
may cancel, but will remain liable to make all the payments agreed.

This is where I disagree with the judgement (IMO). I don't understand how they can possibly class it as a disguised penalty, when the consumer has agreed to the minimum term -- in addition to agreeing to the term, they likely also received a lower membership fee for agreeing to this term. I think in this case, if the judge was adament that 1 month fee for breach of contract was appropriate, they should have also awarded the value of any discounts applied throughout the 9 months the mother was a member. For example, if she saved £10 per month, then charged the £90 saving + the 1 month notice.
Infact, I wouldn't be surprised if gyms started including a term like this now.

However, this opinion is based on the services being made available to her for the remaining 3 months. If they had disallowed entry then perhaps she could be right in that they appear to have accepted her breach of contract and therefore liable for their actual losses only.

This ruling to me makes a mockery of contract law. It is a scenario that could be applied to an awful lot of contracts, it can only push prices up tbh.

Flyboy152

arcon5 wrote: »

I'm quite disappointed this woman won, it makes a mockery of legally binding contracts. If the gym was still made available during this time, she should have to continue with the membership. If this was the case, the amount they claim should not reflect their actual losses at all.

What I do wonder is how this will affect discounts received on membership based on contract length... for example, if they offer £50/ month for a 6-month contract or £40/month for a 12-month contract, if they then cancel at 6 months due to a change of cirsumstances (against the terms of the contract) then the gym has also lost the £10/month they would have otherwise paid.

A simple solution to that could be, adding into the terms and conditions, a loss of discount. But that loss of discount must be fair and it should be proved that they have sold membership at the full price.

Flyboy152

arcon5 wrote: »

The article states they was awarded 1 month membership. She will have to pay £37. It also states she was awarded costs. So I imagine they was also awarded a portion of the collection agencies fee also, as the math here doesn't seem to add up.

I think she may have a valid reason had a doctor had a doctor advised her not to partake in excercise, but generally speaking I don't see why falling pregnant would mean you can't use a gym, simply go a little easier than you would had you not been pregnant.
And i'm guessing also that a small portion of pregnancys are genunely "unforeseen" :rotfl:

I shouldn't think that it would be reasonable to expect people to plan their families around gym membership.

arcon5

Flyboy152 wrote: »

I shouldn't think that it would be reasonable to expect people to plan their families around gym membership.

They're not planning a family around specifically a gym membership, a family should though be planned around your financial and personal committments as a whole. Otherwise this point could be applied to most situations/contracts in life.

Falling pregnant, generally doesn't mean you can no longer attend a gym anyway. So both can be done in unison, its just in this case it appears she no longer wished to do so (not the gyms problem). (Unless ofcourse new information comes to light and she couldn't use it because of medical reasons).

antrobus

tomwakefield wrote: »

While those that want to go end up paying increased costs....

So what you're saying is that people who join a gym and use it will end up paying more than people who join a gym and don't use it. Seems reasonable to me.

arcon5

antrobus wrote: »

So what you're saying is that people who join a gym and use it will end up paying more than people who join a gym and don't use it. Seems reasonable to me.

Or that members end up paying a higher price to cover the lost revenue of those who recinded their contract thinking/knowing they cannot persue them for the full membership price for the remainder of the contract.

halibut2209

Or it could encourage gyms to be more reasonable and go for monthly contracts rather than yearly ones.

arcon5

halibut2209 wrote: »

Or it could encourage gyms to be more reasonable and go for monthly contracts rather than yearly ones.

Most gyms do offer low-term contracts, they're usually quite pricy though. I looked at LA Fitness recently, not wanting to commit to a min.term, if memory serves correct it was £62 for 6 weeks (£40ish per month equivelent) compared to last 12 month contract I signed at just £25 :eek:


However, although it would be nice to be offered shorter terms, why shouldn't these clubs be allowed to operate a business model which involves minimum terms? So long as it is clear to the user what they are agreeing to, I don't feel 12 months to be unfair.

unholyangel

arcon5 wrote: »

The article states they was awarded 1 month membership. She will have to pay £37. It also states she was awarded costs. So I imagine they was also awarded a portion of the collection agencies fee also, as the math here doesn't seem to add up.

No the collection charges levied were deemed to be unfair and it was the gym who was awarded costs, not the "mother".

arcon5 wrote: »

This is where I disagree with the judgement (IMO). I don't understand how they can possibly class it as a disguised penalty, when the consumer has agreed to the minimum term -- in addition to agreeing to the term, they likely also received a lower membership fee for agreeing to this term. I think in this case, if the judge was adament that 1 month fee for breach of contract was appropriate, they should have also awarded the value of any discounts applied throughout the 9 months the mother was a member. For example, if she saved £10 per month, then charged the £90 saving + the 1 month notice.
Infact, I wouldn't be surprised if gyms started including a term like this now.

However, this opinion is based on the services being made available to her for the remaining 3 months. If they had disallowed entry then perhaps she could be right in that they appear to have accepted her breach of contract and therefore liable for their actual losses only.

This ruling to me makes a mockery of contract law. It is a scenario that could be applied to an awful lot of contracts, it can only push prices up tbh.

The reason is because it was not a genuine estimate of their actual loss. In contract law you cannot claim for "coulda woulda shoulda" it is actual loss that is important. Plus in a breach of contract situation, the other party has a duty to mitigate their losses. They cannot simply claim for the whole value of the contract if that is not their actual loss.

If they were able to get a new member in AND were awarded the full amount in effect they would have been compensated twice. For a breach of contract you can only claim for actual losses incurred due to the breach.

arcon5

unholyangel wrote: »

In contract law you cannot claim for "coulda woulda shoulda" it is actual loss that is important.

The concept of 'Loss of Bargain' is a bit of a 'coulda' situation.

If the consumer should be allowed get out clauses for unforseen circumstances suchas pregnancy, maybe the gym should be allowed getout clauses for unforseen circumstances suchas a significant rent review in order to re-establish prices. All in the name of being balanced offcoruse.