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Contract Law Question

Discussion in 'Business, Careers & Education' started by furo, Sep 28, 2010.

  1. furo

    furo Senior member

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    Can a business owner (a gym in this case) make a contract in MA to obligate a member of a gym to pay every month for an entire year, with NO termination clause (other than if you terminate early, you owe the remaining balance for the entire year)?

    I'm assuming that legally, there'd HAVE to be a clause for early termination w/o penalty, such as military duty, etc. But does there have to be a clause that allows someone to terminate and just pay a standard, reasonable penalty? Think of rental contracts, your local cell phone contract, etc ... those have reasonable termination penalties even though you sign a yearly contract.
     
  2. mordecai

    mordecai Senior member

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    doesn't this: "if you terminate early, you owe the remaining balance for the entire year"

    answer this: "does there have to be a clause that allows someone to terminate and just pay a standard, reasonable penalty?"

    ?

    If there is some other federal/municipal law regarding exemptions from penalty, then it might not be necessary for the contract to define it. It will stand regardless of what the contract says.
     
  3. furo

    furo Senior member

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    doesn't this: "if you terminate early, you owe the remaining balance for the entire year"

    answer this: "does there have to be a clause that allows someone to terminate and just pay a standard, reasonable penalty?"

    ?

    If there is some other federal/municipal law regarding exemptions from penalty, then it might not be necessary for the contract to define it. It will stand regardless of what the contract says.


    I'm thinking of it terms of reasonableness. I.e. if, as a landlord, I write in a penalty for late payment of $100 per day, and a tenant signs the contract, it doesn't necessarily make it legal. A judge can deem the penalty as excessive or unreasonable and mandate a lesser penalty be paid even though the tenant defaulted on a signed contract...

    So that's why I'm asking the question, because the gym contract's terms seem unreasonable.
     
  4. mordecai

    mordecai Senior member

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    I'm thinking of it terms of reasonableness. I.e. if, as a landlord, I write in a penalty for late payment of $100 per day, and a tenant signs the contract, it doesn't necessarily make it legal. A judge can deem the penalty as excessive or unreasonable and mandate a lesser penalty be paid even though the tenant defaulted on a signed contract... So that's why I'm asking the question, because the gym contract's terms seem unreasonable.
    oh ok. not sure if requiring payment for a full year is legal, but it wouldn't surprise me if it was. if it was clearly outlined in the contract, the onus is probably on you to fulfill your obligation. might depend on why you're terminating the contract? Check the civil code to see if there' something relating to gym contracts. Department of Consumer Affairs will have this info.
     
  5. Harold falcon

    Harold falcon Senior member

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    In Pennsylvania, such a clause is legal and could be enforced.

    Having said that, I have occasionally been successful in the past with people who experience a death in the family or unexpected military deployment or something similar in getting the contract for a gym membership or a cell phone canceled. Remember that the enforcement of contracts is at the discretion of a local judge, and unless the creditor is willing to spend the money to appeal to a higher court the local judge can do pretty much whatever the hell he or she wants.
     
  6. IUtoSLU

    IUtoSLU Senior member

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    I echo what H. Birdman, esq. just told you. Sometimes extreme extenuating circumstances would be enough to get a gym to forget that clause. Otherwise, it isn't really unconscionable IMO. You have to remember, you are the one who agreed to that contract and signed it. If you didn't like it, you could have negotiated to have it changed or (more likely) gone to a different gym.
     
  7. River Dog

    River Dog Well-Known Member

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    In my experience, gym contracts are all bark and zero bite. I decided to quit a gym, because I was going to work out at home instead. So I told them that I wasn't going to pay and blocked them from taking money from my bank account. This resulted into them cutting their losses and leaving me alone after the initial phase of threatening letters and phone calls.

    People quitting gyms is very common and it's not worth their time or money to go after all these people. Gym contracts are in fact one of the easiest to get out of and hardest to actually enforce.
     
  8. CouttsClient

    CouttsClient Senior member

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    In my experience, gym contracts are all bark and zero bite. I decided to quit a gym, because I was going to work out at home instead. So I told them that I wasn't going to pay and blocked them from taking money from my bank account. This resulted into them cutting their losses and leaving me alone after the initial phase of threatening letters and phone calls.

    People quitting gyms is very common and it's not worth their time or money to go after all these people. Gym contracts are in fact one of the easiest to get out of and hardest to actually enforce.

    +1 Just block them from taking the money from your account and see if they try to enforce. I doubt they will
     
  9. Harold falcon

    Harold falcon Senior member

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    In my experience, gym contracts are all bark and zero bite. I decided to quit a gym, because I was going to work out at home instead. So I told them that I wasn't going to pay and blocked them from taking money from my bank account. This resulted into them cutting their losses and leaving me alone after the initial phase of threatening letters and phone calls.

    They didn't report it to a credit agency? Even if they don't sue they could easily report you, potentially knocking your credit score down a few points.
     
  10. CouttsClient

    CouttsClient Senior member

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    They didn't report it to a credit agency? Even if they don't sue they could easily report you, potentially knocking your credit score down a few points.
    I've had the same issue... They sent it to a collection agency. I didn't pay. NO problems Don't you need someone's social to report them to the credit bureaus? It isn't on my report and this happend 3 years ago.
     
  11. furo

    furo Senior member

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    I thought about that route but the risk of having credit problems outweigh the benefit
     
  12. River Dog

    River Dog Well-Known Member

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    They didn't report it to a credit agency? Even if they don't sue they could easily report you, potentially knocking your credit score down a few points.

    Nope and I have experienced this with a few gyms over the years. They not only gave up trying to get the money from me, but they couldn't even be bothered to deliver on the threats like reporting me to a credit agency. They try to scare you into paying and it's an empty threat.

    To be honest, I don't think they really care. If 10 people quit a gym, maybe most would be intimidated by the threats and will pay the money. They are willing to take a bath on the rest. It's not like they lost money by me leaving the gym like say if you bought a TV on department store credit card and didn't pay, but still have the TV. This is why it's not worth it for gyms to spend money trying to enforce the contract, because they haven't lost anything and I am sure there are 10 new memberships to take my place.
     
  13. Harold falcon

    Harold falcon Senior member

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    Nope and I have experienced this with a few gyms over the years. They not only gave up trying to get the money from me, but they couldn't even be bothered to deliver on the threats like reporting me to a credit agency. They try to scare you into paying and it's an empty threat.

    To be honest, I don't think they really care. If 10 people quit a gym, maybe most would be intimidated by the threats and will pay the money. They are willing to take a bath on the rest.


    Obviously your jurisdiction is different than Pennsylvania. I have seen gyms and cell phone companies go after people quite often, even for as little as a few hundred dollars. Most of the gym contracts I have seen here provide that the gym can collect the remainder due on the contract, plus collection costs and attorney fees, which makes it worth their while to go after people.

    Most gyms and cell phone companies don't follow this logic. They see the lost revenue on attracting you as a client (advertising, free phones, other promotions) that they would only make up if you stayed through the contract. To them, if you quit early and don't buy out your contract then they are losing money.
     
  14. River Dog

    River Dog Well-Known Member

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    I thought about that route but the risk of having credit problems outweigh the benefit

    It's an empty threat, but obviously you need to do what's best for you. I think one thing people need to have knowledge of is the collection industry and how little power they actually have.

    If you ever get calls or letters from collection agencies, 10 times out of 10, it is empty threats and I am surprised that people get scared by these people or feel intimidated, but people simply don't know their rights.

    In the times that I have gone to a collection agency, I literally tell them to fuck off. Why? Because I don't want to deal with a collection agency and the fact that they are making a commission off collecting money from me, so they will make any shit up to get that money from me. I will go back to the company that I owe money to and tell them that I am going to pay them directly and not the collection agency. They then take my money, my credit is fine and the collection agency making empty threats got nothing except whatever the company pays them to handle all their collections.
     
  15. Harold falcon

    Harold falcon Senior member

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    I've had the same issue...

    They sent it to a collection agency. I didn't pay. NO problems

    Don't you need someone's social to report them to the credit bureaus? It isn't on my report and this happend 3 years ago.


    The gym probably wouldn't report it directly, they would contract it out to a debt collector agency which often use less than legitimate means to attempt to collect debt. They are often able to pick up your social security number by backdooring it from your credit card or bank account that is linked to the gym membership.
     
  16. Harold falcon

    Harold falcon Senior member

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    In the times that I have gone to a collection agency, I literally tell them to fuck off. Why? Because I don't want to deal with a collection agency and the fact that they are making a commission off collecting money from me, so they will make any shit up to get that money from me. I will go back to the company that I owe money to and tell them that I am going to pay them directly and not the collection agency. They then take my money, my credit is fine and the collection agency making empty threats got nothing except whatever the company pays them to handle all their collections.

    When was the last time you ran your credit? Your situation does not comport with the experiences of many other people.
     
  17. River Dog

    River Dog Well-Known Member

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    Obviously your jurisdiction is different than Pennsylvania. I have seen gyms and cell phone companies go after people quite often, even for as little as a few hundred dollars. Most of the gym contracts I have seen here provide that the gym can collect the remainder due on the contract, plus collection costs and attorney fees, which makes it worth their while to go after people.



    Most gyms and cell phone companies don't follow this logic. They see the lost revenue on attracting you as a client (advertising, free phones, other promotions) that they would only make up if you stayed through the contract. To them, if you quit early and don't buy out your contract then they are losing money.


    My position on gym memberships isn't the same as cell phone contracts at all. They will go after you, because they can afford to go after everyone who defaults on a contract and these companies are evil in a lot of ways. But with cell phones, there is actual revenue lost from me directly if I defaulted on a contract that I don't see in defaulting on a gym membership. I am just no longer showing up to use their equipment.

    My jurisdiction isn't any different. They have all that stuff written into our gym contracts too, so maybe the only difference is that in Pennsylvania, they are willing to go full out to collect the money even if it means going to court, but where I live they can't be bothered and it's just too much of a pain in the ass. I really don't know anyone that has gone to court over a gym membership. They threaten and they go away.
     
  18. AR_Six

    AR_Six Senior member

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    I think, up here at least, that any "penalty" in the K for a breach needs to be in the form of liquidated damages - that is it's allowed but it needs to be a reasonable estimate of what the damages will be as a result of the breach. However, if you end early, damages will be... well, whatever you would've paid up until the end of the term. If the early termination clause is less than that it's likely not unreasonable. The landlord's late penalty clause thing might be unconscionable, I dunno. It's a pretty gray issue when you get into arguing that a term is "unreasonable".
     
  19. River Dog

    River Dog Well-Known Member

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    When was the last time you ran your credit? Your situation does not comport with the experiences of many other people.

    Not too long ago, it's fine. Why what has been your experience?

    If you pay the company and not the collection agency, they can't report you because you didn't pay them. If you inform the collection agency that you have had discussions with the company and that you will be paying the company instead, they can't do anything about it.

    If they did report you owing money hypothetically speaking, all you would have to do is show the balance paid to the company and they would have to remove it from your credit history as being an incorrect report.
     
  20. djblisk

    djblisk Senior member

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    +1 on what Harvey Birdman said.

    Your credit score is very important. Well thats if you don't have the full amount to pay for whatever you want in cash, including a home.
     

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