Contract Law Question

[River Dog]

Originally Posted by Pelikan2

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.

 

[furo]

Originally Posted by River Dog

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."

 

[RedLantern]

Originally Posted by Pelikan2

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

Originally Posted by AR_Six

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.

 

[deadly7]

Originally Posted by RedLantern

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.

 

[IUtoSLU]

Originally Posted by deadly7

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?

 

[CouttsClient]

Originally Posted by IUtoSLU

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.

 

[djblisk]

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.

 

[River Dog]

Originally Posted by djblisk

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 ********** and pay crazy penalites because they suck?

 

[CouttsClient]

Originally Posted by River Dog

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

 

[River Dog]

Originally Posted by IUtoSLU

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.

 

[djblisk]

Originally Posted by River Dog

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 ********** and pay crazy penalites because they suck?


Of course there are ways to go about things. I meant it as a general discussion topic.

What ******* lawyer is going to help anyone out of a 1,000 contract debt? I know I wouldn't, that is **** money for any lawyer.

This topic is getting larger and larger because individual situations deserve different treatment. Speaking in generalities isn't appropriate for such a subject.

 

[RedLantern]

Originally Posted by CouttsClient

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.

This is false. There is a term for this type of situation (which i forget), but basically in this case because the gym does not have a finite number of memberships it can sell, there is no way that signing another member up can make up for the loss of your membership dues. It's not like the gym has a limited amount of inventory and if you return something it can just sell it to someone else.

Secondly, are you seriously arguing that the very nature of service-based contracts is unfair?

 

[RedLantern]

Originally Posted by deadly7

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.

It seems that you are viewing this as "they are entitled to my money" and not as "they are entitled to my money and I am entitled to their service." Just because you may not want the service any more doesnt mean that you arent getting something out of the deal. It may be something that you don't want any more, but why should the gym (or any other service provider) have it's business subject to ex-post changes in your prefrerences?

 

[CouttsClient]

Originally Posted by RedLantern

This is false. There is a term for this type of situation (which i forget), but basically in this case because the gym does not have a finite number of memberships it can sell, there is no way that signing another member up can make up for the loss of your membership dues. It's not like the gym has a limited amount of inventory and if you return something it can just sell it to someone else. Secondly, are you seriously arguing that the very nature of service-based contracts is unfair?
I suppose I'm arguing that I don't care whether or not it's fair. If I decide I no longer want to use your services I will say so and I will not pay for them if I no longer need them. If you would like to pursue it legally you are within your rights to do so. I've never had a problem getting out of contracts that no longer were of benefit to me...

 

[River Dog]

Originally Posted by djblisk

Of course there are ways to go about things. I meant it as a general discussion topic.

What ******* lawyer is going to help anyone out of a 1,000 contract debt? I know I wouldn't, that is **** money for any lawyer.

This topic is getting larger and larger because individual situations deserve different treatment. Speaking in generalities isn't appropriate for such a subject.

If you are a lawyer and that's your position, I wouldn't want you as my lawyer ever. Countless people have been screwed by cell phone companies, gyms and many other services when they didn't deliver customer satisfaction and promises made, so those customers should be able to walk but instead they don't know any better and take it ********** by paying crazy penalities.

You should be telling people that yes, make some phone calls to a lawyer if you want to and do some research to try to get out of the contract if you are not happy. I would rather pay your crazy lawyer fee to get me out of a contract, then to give one more cent to a company that I hate.