Considering Taking Personal Trainer to Small Claims?

steampowered

I linked you to that article because it provides a clear explanation of the legal difference between a 'debt' claim and a 'damages' claim. Nobody is suggesting that the Op's scenario involves an indemnity.

If you struggle to see how the distinction between 'debt' and 'damages' claims can apply in other circumstances, you might want to consider the litigation brought by the OFT against the banks in relation to unauthorised overdraft fees.

In basic terms, the Supreme Court found that unauthorised overdraft fees are part of the price for having an account, rather than a penalty for breaching your contract with the bank.

For that reason the court found that the fees were a 'debt' claim, not a 'damages' claim. And hence the fees could not be a penalty at common law and also did not constitute an 'unfair term' for the purposes of consumer legislation.

Prepayment of PT sessions is payment of the price for a service, which is a debt claim. The legal points you make around penalty clauses and mitigation of loss would only apply to a damages claim and are simply inapplicable to the Op (and I doubt the Op would want to try their luck at making technical legal points over a tiny claim in any event).

unholyangel

steampowered wrote: »

I linked you to that article because it provides a clear explanation of the legal difference between a 'debt' claim and a 'damages' claim. Nobody is suggesting that the Op's scenario involves an indemnity.

If you struggle to see how the distinction between 'debt' and 'damages' claims can apply in other circumstances, you might want to consider the litigation brought by the OFT against the banks in relation to unauthorised overdraft fees.

In basic terms, the Supreme Court found that unauthorised overdraft fees are part of the price for having an account, rather than a penalty for breaching your contract with the bank.

For that reason the court found that the fees were a 'debt' claim, not a 'damages' claim. And hence the fees could not be a penalty at common law and also did not constitute an 'unfair term' for the purposes of consumer legislation.

Prepayment of PT sessions is payment of the price for a service, which is a debt claim. The legal points you make around penalty clauses and mitigation of loss would only apply to a damages claim and are simply inapplicable to the Op (and I doubt the Op would want to try their luck at making technical legal points over a tiny claim in any event).

If you think the article discussed the difference between a claim for debt and a claim for damages then please quote the relevant paragraphs because I've read it several times now and to my eye all it does is detail the differences in indemnity - which is wholly irrelevant here.

The banking case you refer to - you're not understanding the distinction. It was in relation to unauthorised overdrafts - ie the bank loaning the customer money, the customer had already received the benefit of the money in its entirety. Plus as you say, the courts ruled it wasn't a breach of contract at all - unauthorised overdrafts weren't an existing contractual entitlement for the customer, it created a contract for additional services under which the consumer agreed to pay the price the bank asked. So likewise, irrelevant here.

If you think the judgement discusses the difference between a claim for debt and a claim for damages (especially since the word debt only features twice and damages doesn't feature at all) then please quote the relevant paragraphs.

Nextonal

Wrong post

Rob_LB

I never made any suggestion that the price of the PT sessions are unfair (which I think is what you are alluding to) rather it is the alleged term that any unused sessions are non-refundable - that is the distinction.

I also agree with you that mitigation of loss has no application in respect of a debt claim, but it does have its place when the courts assess a term for fairness as they will look at all of the circumstances of the case e.g. whether the trader could have re-sold the goods on or re-advertised the cancelled booking and so reduced its losses. It is likely that a non-refund clause in any circumstance even when the consumer cancels, creates a significant imbalance between the parties. The updated guidance in the CMA reflects several behaviours which might involve unfair terms, including the taking of deposits or advance payments and charging disproprtionately high charges for cancelling. The guidance was in part down to the fact that wedding planners in particular, take a fairly substantial despot/advance payment but if the customer cancelled due to unforeseen circumstances, no refund would be given. The wedding planners would then rebook another customer for the cancelled date an effctively created a double profit (particularly where the cancellation took place several months in advance before the booked date).

I am fully aware of the OFT v Abbey & ors case, but as a side note, a new introduction into the CRA is that the price or main subject matter of the contract can be assessed for fairness if it is not prominent and transparent.

Of course you are free to disagree with the CMA's stance on this which I am sure several lawyers have cast their eye over it before it being published. But I am going to have to say that the OP's position has nothing to do with the fairness of the price of the PT sessions paid but the clause relating to cancellation and the refund of unused sessions.

As I previously said, this alleged term may not have been mentioned at the time and in that case, the PT cannot incorporate a new term of the contract once it has been entered into without consent of the OP so there may very well be an easier argument.

unholyangel

Rob_LB wrote: »

I never made any suggestion that the price of the PT sessions are unfair (which I think is what you are alluding to) rather it is the alleged term that any unused sessions are non-refundable - that is the distinction.

I think perhaps his post was in response to me (although he's the better authority to answer that).

I think steampowered is taking the view that the OP agreed the contract price of £x for x sessions so the PT has a claim for the full amount as agreed and that as the OP has no statutory right to cancel, they're liable for the full contract price.

Obviously that would be completely incompatible with the law as it would mean a breach of contract would never exist and it would always be a claim for a debt under contract rather than damages under breach.

steampowered

unholyangel wrote: »

If you think the article discussed the difference between a claim for debt and a claim for damages then please quote the relevant paragraphs

Whether an indemnity gives rise to a debt or a damages claim will have a significant impact on the indemnified party’s ability to recover under that indemnity. For instance, if an indemnity is construed as a debt the principles of remoteness of loss and mitigation will not apply, making it far easier for the indemnified party to recover its loss.

The banking case you refer to - you're not understanding the distinction. It was in relation to unauthorised overdrafts - ie the bank loaning the customer money, the customer had already received the benefit of the money in its entirety.

The case was not about the bank recovering loaned money. It was about the bank recovering fixed fees for unauthorised overdrafts in addition to the money lent and any interest thereon (e.g. you go £0.01 overdrawn and the bank charges you a £30 fee for the privilege).

I don't think it is helpful to split hairs over what articles and judgments I have linked. It is possible to apply the same legal principle to a slightly different factual situation. The difference between a debt claim and a damages claim is contract law 101.

Obviously that would be completely incompatible with the law as it would mean a breach of contract would never exist and it would always be a claim for a debt under contract rather than damages under breach.

Nobody has breached the contract. When a customer buys PT sessions the customer doesn't have a contractual obligation to use the sessions. The customer buys a right to the sessions and can use them or not.

Your argument is a bit like suggesting that a customer who walks into McDonalds and buys a Big Mac would be in breach of contract if they don't eat it. Nope. Once the customer has paid for their burger (or in this case PT sessions), the customer is not under any further contractual obligation.

There is a significant difference between a customer cancelling a rolling service within its minimum term (which is a breach of contract by the customer) and the customer pre-paying for a service in advance (failing to use a pre-paid service is not a breach of contract).

steampowered

Rob_LB wrote: »

I never made any suggestion that the price of the PT sessions are unfair (which I think is what you are alluding to) rather it is the alleged term that any unused sessions are non-refundable - that is the distinction.

Indeed. All of the common law arguments around penalty clauses and mitigation of loss are complete non-starters.

But I agree there may some sort of Consumer Rights Act argument for saying that a right to get a refund for unpaid sessions should be implied into the contract on fairness grounds.

I wouldn't fancy arguing that in court though. Particularly in the county courts.

unholyangel

steampowered wrote: »

Whether an indemnity gives rise to a debt or a damages claim will have a significant impact on the indemnified party’s ability to recover under that indemnity. For instance, if an indemnity is construed as a debt the principles of remoteness of loss and mitigation will not apply, making it far easier for the indemnified party to recover its loss.

Right, so its discussing the difference in indemnity clauses as I said earlier and is not detailing the difference between a claim for debt or damages.

An indemnity is not a default provision to be automatically included as a term of every contract. Nor is it the default position in the law. The article you linked to is only relevant where they are seeking restitution via an indemnity clause (and even your own article states that there are 3 types of indemnity and only 1 will give rise to a claim for debt, the other 2 are a claim for damages).

That is why I asked if you understood what it was. Because if you had understood what it was you were linking, you would have at least asked the OP what T&C's she agreed to and looked in those T&C's for a suitably worded indemnity clause.

The case was not about the bank recovering loaned money. It was about the bank recovering fixed fees for unauthorised overdrafts in addition to the money lent and any interest thereon (e.g. you go £0.01 overdrawn and the bank charges you a £30 fee for the privilege).

The case hinged on whether the customer using the unauthorised overdraft (or as it was described in the judgement - unarranged borrowing) was a penalty for breaching existing obligations/rights, or whether it amounted to a contract for additional services (under which the fee would be exempt from being considered unfair as explained by Rob_LB above) outside of the main contractual relationship. The courts found it to be the latter - so wholly irrelevant here (and it most definitely does not discuss or detail the difference between a claim for debt or damages as you alleged).

Your argument is a bit like suggesting that a customer who walks into McDonalds and buys a Big Mac would be in breach of contract if they don't eat it. Nope. Once the customer has paid for their burger (or in this case PT sessions), the customer is not under any further contractual obligation.

No, my argument is nothing like that. For a start, the obligations in that instance are to be performed immediately and the trader has fully performed (or executed if you prefer) theirs. That is remarkably different from a situation where the trader has only partially performed or not started performance at all. That is why I gave the earlier example of ordering goods/services in instalments and cancelling partway through.

There is a significant difference between a customer cancelling a rolling service within its minimum term (which is a breach of contract by the customer) and the customer pre-paying for a service in advance (failing to use a pre-paid service is not a breach of contract).

You're getting too hung up on the prepayment aspect.