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Contract Law Question

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

  1. River Dog

    River Dog Well-Known 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.


    Nothing I have said has resulted into me having a bad credit score. People just need to understand their legal rights when it comes to collection agencies.
     
  2. djblisk

    djblisk Senior member

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    Nothing I have said has resulted into me having a bad credit score. People just need to understand their legal rights when it comes to collection agencies.

    I think you are misconstruing what happened to you.

    YOU were lucky enough to deal with a party who did not have enough teeth to pursue your breach of contract further. YOU were lucky enough they did not report you to a collection and credit agency.

    I'm very happy for you.

    But advising people to do what you did could screw up someone's credit.
     
  3. NorCal

    NorCal 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.


    That is not entirely true and to my mind it is one of the aspects that make contracts such as gym memberships inherently unfair. In these type of contracts there is a presumption of guilt and obligation on the part of the contractee. This is most often seen in the form of collections and credit ratting being effected. If a party, say a gym, says you owe money they pretty much can put your ass in collections and it's up to you to get out and clear your credit record.

    A perfect example of this is when a credit card changes your fee structure, adds a fee, you say "WTF, I did not sign up for this I want out of this card" and they charge you and then put your ass in collections. Even if the fee change WAS unfair or not covered by the initial contract good luck with getting them to see it your way. A collection or credit ratting agency will just assume the credit card company is right, no judge involved.

    OP, one way of looking at the contract is not as a monthly but as a yearly contract that you are making payments on. As in there is no monthly contract at all but rather a monthly payment plan.
    As for the contract, if you really want out, ask nicely. Then take them to small claims court.

    The contracts themselves might be unfair, they could be a contract of adhesion, there could be unfair business practices or collusion between gyms but good luck ever proving it.
     
  4. NorCal

    NorCal Senior member

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    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.



    Sounds like you don't understand how collection and credit scores work. even if the matter is settled, paid, or even dropped, simply having been in collections dings your credit.
     
  5. pscolari

    pscolari Senior member

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    Sounds like you don't understand how collection and credit scores work. even if the matter is settled, paid, or even dropped, simply having been in collections dings your credit.

    I would agree. I have always known the collection agency has bought your debt from the company, say gym in this case and is not working on commission. If the collection agency cannot collect from you thereafter, they can submit this nonpayment info to the credit bureaus. From that point I believe if you want to get it removed you can negotiate with the collection agency by agreeing to pay the balance in return from them removing the mark with the bureaus. Though you might want to get this in writing before agreeing.
     
  6. River Dog

    River Dog Well-Known Member

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    I think you are misconstruing what happened to you.

    YOU were lucky enough to deal with a party who did not have enough teeth to pursue your breach of contract further. YOU were lucky enough they did not report you to a collection and credit agency.

    I'm very happy for you.

    But advising people to do what you did could screw up someone's credit.


    I have said that people should do what's best for them and that I was simply providing my experience with gym memberships. Most people are clueless when it comes to collection agencies and their rights. I was trying to be helpful in this regard.

    Let me add too that my brother is a lawyer and over the years, he has informed me on collection agencies and contracts of this nature in legal terms. They are a joke, but how many people are going to hire a lawyer to go to small claims court.

    People go to court and lose, because they don't know how to defend themselves. Even if I had been sued, my brother would have destroyed them. Gym memberships are so weak in legal terms that they can barely be enforced. But they assume people don't know any better, they get scared about damage to their credit rating and gladly hand over hundreds or thousands of dollars simply out of fear.

    Not every piece of paper you sign your name to is legally binding just so you know. Look at a gym membership contract compared to a cell phone agreement. A cell phone agreement can be 15 pages long or more covering every possible legal aspect you could think of. A gym agreement is 1 to 2 pages long max with so many legal loopholes, that it can't be taken seriously by any lawyer if you wanted to fight it. It's like they printed out a contract template online and put their gym name on it.

    But again, people shouldn't do as I do. I just hope this information is helpful and gets people to do their own research if they find themselves in a similar situation.
     
  7. River Dog

    River Dog Well-Known Member

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    Sounds like you don't understand how collection and credit scores work. even if the matter is settled, paid, or even dropped, simply having been in collections dings your credit.

    I don't know how things are where you live, but simply GOING to collections doesn't hurt your credit. It has to be reported.
     
  8. butterflystyle

    butterflystyle Senior member

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    I don't know how things are where you live, but simply GOING to collections doesn't hurt your credit. It has to be reported.

    Luckily they rarely report [​IMG]
     
  9. River Dog

    River Dog Well-Known Member

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    Luckily they rarely report [​IMG]

    I think you misunderstood me. Getting sent to collections doesn't hurt your credit as they don't report it initially. This is why they send you letters, clearly stating to pay now before any damage is done to credit history. If you pay when they say to in the letter and it still showed up on your credit report, you could sue them.

    A person could be sent to collections 100 times in a year and as long as he paid it off within the time agreed by the collection agency, his credit wouldn't have changed at all and there be no mention of said 100 collection agencies on his report.
     
  10. Pelikan2

    Pelikan2 Senior member

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    People go to court and lose, because they don't know how to defend themselves. Even if I had been sued, my brother would have destroyed them. Gym memberships are so weak in legal terms that they can barely be enforced. But they assume people don't know any better, they get scared about damage to their credit rating and gladly hand over hundreds or thousands of dollars simply out of fear. Not every piece of paper you sign your name to is legally binding just so you know. Look at a gym membership contract compared to a cell phone agreement. A cell phone agreement can be 15 pages long or more covering every possible legal aspect you could think of. A gym agreement is 1 to 2 pages long max with so many legal loopholes, that it can't be taken seriously by any lawyer if you wanted to fight it. It's like they printed out a contract template online and put their gym name on it.
    A so-called "loophole" doesn't make a contract invalid, and you shouldn't discount the ability of short, simple contracts to bind you. Where a contract doesn't squarely address a particular issue you raise in litigation, a court will imply what it believes is a reasonable term. Provided the obligor and obligee demonstrate the intent to be bound by the contract (which they clearly do in a gym membership agreement), the court is going to enforce it, and it's not going to let you run free merely because the two-page agreement didn't address every conceivable contingency. "Legally binding" isn't some magical formula; it's simply an agreement by the parties with the intention of being bound by the terms of that agreement. Missing terms will be inferred from the other contract terms and from market norms. That's all by way of saying that if you signed an agreement that didn't have a cancellation provision, and the statutes of your particular state don't require such a cancellation provision, you're likely going to lose in court. Whether or not credit agencies will chase you and whether the gym will actually bring suit is another matter. You have to remember that courts are just judges (and clerks) and that judges (and clerks) are just people. Those people can generally read a 2 page contract and determine that both parties expected to be bound and that both parties understood (if they read the contract, as they should have) that there was no early termination provision. After reading that and understanding that, those people are likely finding for the gym.
     
  11. River Dog

    River Dog Well-Known Member

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    A so-called "loophole" doesn't make a contract invalid, and you shouldn't discount the ability of short, simple contracts to bind you. Where a contract doesn't squarely address a particular issue you raise in litigation, a court will imply what it believes is a reasonable term. Provided the obligor and obligee demonstrate the intent to be bound by the contract (which they clearly do in a gym membership agreement), the court is going to enforce it, and it's not going to let you run free merely because the two-page agreement didn't address every conceivable contingency. "Legally binding" isn't some magical formula; it's simply an agreement by the parties with the intention of being bound by the terms of that agreement. Missing terms will be inferred from the other contract terms and from market norms.

    That's all by way of saying that if you signed an agreement that didn't have a cancellation provision, and the statutes of your particular state don't require such a cancellation provision, you're likely going to lose in court. Whether or not credit agencies will chase you and whether the gym will actually bring suit is another matter.

    You have to remember that courts are just judges (and clerks) and that judges (and clerks) are just people. Those people can generally read a 2 page contract and determine that both parties expected to be bound and that both parties understood (if they read the contract, as they should have) that there was no early termination provision. After reading that and understanding that, those people are likely finding for the gym.


    What can I tell you? My brother is a lawyer and so on two levels (brother and lawyer), he wouldn't give me bad advice or allow me to put into a position that would cause me harm in some way. If he thought it was in my best interest to just pay the money and forget about it, he would say so. But when he looks over the contract, literally laughs at it and tells me don't worry about it, I am going to listen to him as brother and lawyer.

    The thing about loopholes for any contract, is that an experienced lawyer can take serious advantage if there are many loopholes and more often than not, their client will win the case. Additionally, not everything written on a piece of paper with the word contract on it will be held up in court. For example and this was part of my point about gym contracts earlier, in MY gym contract experience, it was obvious to my brother that they didn't even consult a lawyer (a good one anyway) when creating this contract, because there was wording and other factors that practically made these contracts invalid.

    Maybe big chain gyms will consult lawyers and have professional contracts written for them, but mom and pop gyms will write something themselves with no lawyer feedback and think they are protected.
     
  12. furo

    furo Senior member

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    What can I tell you? My brother is a lawyer and so on two levels (brother and lawyer), he wouldn't give me bad advice or allow me to put into a position that would cause me harm in some way. If he thought it was in my best interest to just pay the money and forget about it, he would say so. But when he looks over the contract, literally laughs at it and tells me don't worry about it, I am going to listen to him as brother and lawyer.

    The thing about loopholes for any contract, is that an experienced lawyer can take serious advantage if there are many loopholes and more often than not, their client will win the case. Additionally, not everything written on a piece of paper with the word contract on it will be held up in court. For example and this was part of my point about gym contracts earlier, in MY gym contract experience, it was obvious to my brother that they didn't even consult a lawyer (a good one anyway) when creating this contract, because there was wording and other factors that practically made these contracts invalid.

    Maybe big chain gyms will consult lawyers and have professional contracts written for them, but mom and pop gyms will write something themselves with no lawyer feedback and think they are protected.


    I'm curious; what were these magical words that made your particular gym contract(s) non-binding? What specifically did your brother point to and say "oh, that's not a term that will hold up in court."
     
  13. RedLantern

    RedLantern Senior member

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    A so-called "loophole" doesn't make a contract invalid, and you shouldn't discount the ability of short, simple contracts to bind you. Where a contract doesn't squarely address a particular issue you raise in litigation, a court will imply what it believes is a reasonable term. Provided the obligor and obligee demonstrate the intent to be bound by the contract (which they clearly do in a gym membership agreement), the court is going to enforce it, and it's not going to let you run free merely because the two-page agreement didn't address every conceivable contingency. "Legally binding" isn't some magical formula; it's simply an agreement by the parties with the intention of being bound by the terms of that agreement. Missing terms will be inferred from the other contract terms and from market norms.

    That's all by way of saying that if you signed an agreement that didn't have a cancellation provision, and the statutes of your particular state don't require such a cancellation provision, you're likely going to lose in court. Whether or not credit agencies will chase you and whether the gym will actually bring suit is another matter.

    You have to remember that courts are just judges (and clerks) and that judges (and clerks) are just people. Those people can generally read a 2 page contract and determine that both parties expected to be bound and that both parties understood (if they read the contract, as they should have) that there was no early termination provision. After reading that and understanding that, those people are likely finding for the gym.


    +1

    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".

    Right, liquidated damages must be a reasonable estimate of actual damages and not a penalty for breach. In some cases (such as breaking a lease) reasonable damages woudl be somewhat less than the full amount of the lease, as the lessor probably be able to mitigate damages by renting the space out to another tenant. However, in the case of the gym, there is no way for the gym to mitigate damages of your breach, the gym does not have a finite number of memberships it can sell, and thus once you breach they are out the full remainder value of the contract with no way to decrease the loss.
     
  14. deadly7

    deadly7 Senior member

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    However, in the case of the gym, there is no way for the gym to mitigate damages of your breach, the gym does not have a finite number of memberships it can sell, and thus once you breach they are out the full remainder value of the contract with no way to decrease the loss.

    I'm just wondering how it got to be that a gym [or many other contractual services] can legally just be entitled to your money. Yeah, yeah it's a contract and you signed up for it, but how is that legal? Obviously IANAL, but it seems ridiculously skewed towards the people for whom it should not be skewed. So long as you're using their services, I agree you should pay them. But it does not "cost" them anything if you revoke your membership, in the sense that you are not using a service and therefore should not be made to pay for it.
     
  15. IUtoSLU

    IUtoSLU Senior member

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    I'm just wondering how it got to be that a gym [or many other contractual services] can legally just be entitled to your money. Yeah, yeah it's a contract and you signed up for it, but how is that legal? Obviously IANAL, but it seems ridiculously skewed towards the people for whom it should not be skewed. So long as you're using their services, I agree you should pay them. But it does not "cost" them anything if you revoke your membership, in the sense that you are not using a service and therefore should not be made to pay for it.

    Think of it in this hypothetical way: I own a gym as a small business owner. I have 100 one-year-long contracts that end at various times. I decide that I need to upgrade some old equipment in order to stay competitive. In order to know if I can afford it, I have to know what money I have coming so I can predict when I can afford the equipment. I do the calculations and decide that I can afford the new equipment.

    I buy the equipment on credit and begin making monthly payments. Then, a couple months later, a new big-box gym opens up. 15 of my customers decide they want to switch to the new gym. Without the protection of the contract, I would be screwed because I would no longer have my predicted income.

    In the above situation, do you really think it is fair for the customer to be able to simply quit whenever they want and scew me, small-time gym owner, over?
     
  16. CouttsClient

    CouttsClient Senior member

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    Think of it in this hypothetical way: I own a gym as a small business owner. I have 100 one-year-long contracts that end at various times. I decide that I need to upgrade some old equipment in order to stay competitive. In order to know if I can afford it, I have to know what money I have coming so I can predict when I can afford the equipment. I do the calculations and decide that I can afford the new equipment. I buy the equipment on credit and begin making monthly payments. Then, a couple months later, a new big-box gym opens up. 15 of my customers decide they want to switch to the new gym. Without the protection of the contract, I would be screwed because I would no longer have my predicted income. In the above situation, do you really think it is fair for the customer to be able to simply quit whenever they want and scew me, small-time gym owner, over?
    Yes. I (customer) should be allowed to stop using a service I no longer have a need for. Perhaps a two month penalty would be fair because it would give said gym the ability to replace my membership Either way...I've experienced this situation before and blocked the gym from taking my money. I moved 15 miles away and it was no longer convenient for me to travel to the gym. Their "cancellation policy" said I could cancel with no problems if it was 20 miles or more away. I told them to sue me if they like. They let it go.
     
  17. djblisk

    djblisk Senior member

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    You guys seem to not understand a major issue about these gym memberships.

    It doesn't matter what you think is reasonable after the fact.

    If you signed a gym membership and understood the consequences of signing a contract regardless of the contract's one-sided terms, you should be bound by that contract.
     
  18. River Dog

    River Dog Well-Known Member

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    You guys seem to not understand a major issue about these gym memberships.

    It doesn't matter what you think is reasonable after the fact.

    If you signed a gym membership and understood the consequences of signing a contract regardless of the contract's one-sided terms, you should be bound by that contract.


    My lawyer disagrees with you.

    Not to mention the fact that people go to lawyers all the time to bail them out of contract issues, so even if someone signs a million dollar contract and there are penalties if he doesn't fullfil that contract, he will still have his lawyer try to get him out of it or negotiate better terms despite signing the original terms of the contract.

    If you can get out of your gym membership because you are not happy customer and want to switch for a better gym that delivers on your needs, why not try to? Should we just take it in the ass and pay crazy penalites because they suck?
     
  19. CouttsClient

    CouttsClient Senior member

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    My lawyer disagrees with you.

    Not to mention the fact that people go to lawyers all the time to bail them out of contract issues, so even if someone signs a million dollar contract and there are penalties if he doesn't fullfil that contract, he will still have his lawyer try to get him out of it or negotiate better terms despite signing the original terms of the contract. If you can get out of your gym membership, why not try to?

    +1
     
  20. River Dog

    River Dog Well-Known Member

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    Think of it in this hypothetical way: I own a gym as a small business owner. I have 100 one-year-long contracts that end at various times. I decide that I need to upgrade some old equipment in order to stay competitive. In order to know if I can afford it, I have to know what money I have coming so I can predict when I can afford the equipment. I do the calculations and decide that I can afford the new equipment.

    I buy the equipment on credit and begin making monthly payments. Then, a couple months later, a new big-box gym opens up. 15 of my customers decide they want to switch to the new gym. Without the protection of the contract, I would be screwed because I would no longer have my predicted income.

    In the above situation, do you really think it is fair for the customer to be able to simply quit whenever they want and scew me, small-time gym owner, over?


    Yes. Yes I do. I can't worry about your predicted income and I need to get what I want from a gym. If you can't deliver and the big box does, I have to take my business elsewhere. At the end of the day, the customer has to be happy and not feel that they are held hostage by a gym they feel isn't living up to hype they gave you when you first went there for a tour.
     

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