In the recent case of OFT v Ashbourne Management Services Ltd it was held that payments without discount for early termination and minimum membership periods were unfair under the Unfair Terms in Consumer Contracts Regulations 1999.
In brief, Ashbourne acts for over 700 gyms. Its standard contracts provide for a minimum membership period of between one and three years. Some of the contracts also provided that if a member terminated before the end of the minimum period, he would have to pay the full balance for the period, without discount. There were also provisions that if a gym member committed a minor breach, Ashbourne could terminate the contract and claim the balance of fees due for the minimum period. Ashbourne also reported members (when behind in subscription payments) to credit reference agencies, even where payment was late because the member disputed the payment.
The OFT brought proceedings on the grounds that the terms were unfair under the Unfair Terms and Consumer Contracts Regulations 1999 and that some of the practices employed by Ashbourne contravened the Consumer Protection from Unfair Trading Regulations 2008.
The OFT’s complaints were upheld in the High Court
Any clubs and other organisations which may have similar contractual terms should take note of this decision and adjust their terms accordingly.