New Zealand Law Society - Gyms to make contracts fitter after review into unfair contract terms

Gyms to make contracts fitter after review into unfair contract terms

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Gyms and fitness centres have agreed to amend their standard form contracts after a Commerce Commission review into unfair contract terms in the sector.

The Fair Trading Act bans contract terms which create a significant imbalance of rights or obligations between companies and consumers.

Commissioner Anna Rawlings says the sector generates a range of consumer complaints, with more than 700,000 New Zealanders belonging to a gym or fitness centre.

The review considered 10 standard membership agreements from a range of small and large providers nationwide including Anytime Fitness, City Fitness, Club Physical, Configure Express, Jetts, Les Mills, Next Generation, Snap Fitness and Loft 45. It also looked at the Debitsuccess template contract a range of smaller gyms use.

“Our review identified a number of potentially unfair terms across the contracts,” says Ms Rawlings.

“These included onerous liability provisions where gyms’ tried to exclude all liabilities to customers for damage or loss to members’ property, as well as provisions allowing the gym to unilaterally vary their location and services. A number of the contracts were not written in plain English and contained complicated and onerous cancellation processes and notice provisions.

“We’re satisfied with the response from gyms to our concerns, with all providers demonstrating a desire to comply with the law, either justifying how the terms are necessary to protect their legitimate business interests or agreeing to amend their contracts. For some it prompted a complete rewrite of their contracts.

“We’re particularly pleased to see gyms amending their termination clauses and associated fees. This includes some gyms reducing their 30-day notice periods for cancellations outside any minimum term down to between 7 and 14 days. Some gyms also amended provisions relating to their liability to members, and variation clauses about their location and the services they offer.”

The Commission has provided compliance advice letters to all gyms involved in the review. It also encourages gyms that were not involved in the review to consider their own contracts.

The gym report is the third review by the Commission into unfair contract terms under the Fair Trading Act following reviews into retail telecommunications and energy contracts.

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