in Business Contracts

Will your contract be fit for the fitness industry?

The fitness industry is one of the fastest growing in the Western world, especially when it comes to gyms and gym memberships, which cost several hundred dollars for a subscription of a few months. For most users of gym services, the standard arrangement is to sign up for a subscription and the gym fees are deducted each month directly from the user’s credit card or bank account. Given the scope for abuse in a system of this variety, contracts for gym membership sometimes run afoul of the EU Directive on Unfair Terms in Consumer Contracts, adopted in the UK as Consumer Contracts Regulations.

Trimming the fat from fitness contracts

It is such a contract that has seen the Office of Fair Trading pursue a High Court order against gym management company, Ashbourne Management Services Limited, after doubts were raised about its compliance with consumer credit laws and fairness in contract provisions.

Ashbourne made a practice of drawing up membership agreements and collecting payments. Under the terms of the agreement, users were locked into a contract for up to three years at a time, in which they were unable to cancel their memberships. Those who attempted to do so were often presented with bills worth hundreds of pounds for the remainder of the amount owed on the gym membership contract.

Many of the gym users were unable to pay the bill, and were reported to a credit defaulting agency by Ashbourne.

In classic contract law, such an arrangement would not present a problem. However, the proliferation of laws designed to protect consumers means that such terms are increasingly likely to be found unlawful and may render part, or your entire contract void. In order to avoid such instances, ensure that your contracts are drafted and/or reviewed by a qualified solicitor with experience in commercial contract drafting.