Office of Fair Trading Bans Gym Unfair Contract Terms

The Office of Fair Trading (OFT) secured a High Court order earlier this year which sought to ban gym unfair contract terms in the UK, reports company secretarial services provider London Registrars (http://www.london-registrars.co.uk/). The case highlighted the need for gyms to check their contract terms to ensure they are within the law and whether they need to let their customers know of any changes to the terms of their contracts at any time.

The case that prompted the OFT crack down on unfair gym contract terms concerned Ashbourne Management Services Ltd (Ashbourne), a gym management company which was the subject of  many complaints both to the company itself and to local trading standards services regarding its contract terms. The complaints mostly concerned the length of the contracts and the fact that Ashbourne made the contracts difficult to cancel. The OFT issued an enforcement order to Ashbourne and its directors and under the High Court judgment requirements, Ashbourne was forced to write to more than 700 gyms under its management to inform them of the terms of the judgment and the importance of company compliance in each case.

The court found that many of the terms in the Ashbourne contracts were unfair and therefore unenforceable, including the minimum contract length terms in some of the standard gym contracts. It also found that Ashbourne was using unfair and unlawful techniques for collecting membership payments which were in arrears, including the use of credit reference agencies. Cavendish Elithorn, Senior Director of the OFT Goods and Consumer Group, was quoted in The ICSA Chartered Secretary Magazine as saying, “We are pleased that the enforcement order has been granted in the High Court and urge gyms that use similar contracts that they should review their customer contracts for fairness. This judgment and order make clear that businesses cannot hide behind contract terms to engage in intrinsically unfair commercial practices.....This case sends a clear signal to traders that the OFT and local trading standards services will not hesitate to take action to protect consumers.”

All organisations need to ensure company compliance with lawful, fair and justified contract terms. London Registrars’ legal department prepares terms of businesses for clients so that any potentially unfair contract terms are avoided. To find out more about the full range of legal support and company secretarial services offered by London Registrars, visit the website at http://www.london-registrars.co.uk/.