In the High Court case of OFT V Ashbourne Management Services Ltd and others it was ruled that certain standard terms in gym memberships were unfair.
The High Court ruled that the minimum membership periods were designed to take advantage of the inexperience of the average gym user. Members who wished to cancel their agreement early were expected to pay all membership fees for the duration of the minimum period. The judge ruled that this amounted to a penalty as no allowance had been made for the fact that the gyms benefited from receiving this payment. The judge also ruled that it was unfair to not allow a member to cancel their membership due to circumstances including illness, injury and loss of livelihood.
In this case Ashbourne had been registering members with a credit reference agency if they defaulted on payments – even if there was a genuine dispute. This was also deemed as unfair as the contracts in question did not constitute a consumer credit agreement.
This decision could affect all businesses that have contracts that impose minimum terms and early cancellation charges on customers.