By Garry Hertzberg, practising Attorney at Dewey Hertzberg Levy Attorneys and presenter of The Laws of Life on Cliffcentral.com
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The gym deal on offer looks great and per visit, it seems very affordable. It happens from time to time that these good intentions don’t work out – a resolution to start going to gym at least twice a week becomes once a week, and before you know it you’re paying a subscription for a service you rarely use.
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What then? You’ve signed up for 24 months and just a few months later you realise your mistake. In an attempt to get out of it, you cancel the debit order and now there is outstanding money. These were the facts of a case that came before the Consumer Ombudsman quite recently.
In this case, the consumer had actually signed a 36-month contract at R200 per month and tried to cancel after three months. The gym wanted him to pay his outstanding fees that he had withheld and half of the balance of the contract as a penalty totalling about R4 500. They based this on a penalty clause in the contract itself.
Straight away the Ombudsman could see two problems in terms of the Consumer Protections Act. Firstly, the maximum period for a fixed term contract is 24 months. The second issue, which was clear to the Ombudsman, was that the gym could not rely on the cancellation penalty as written in the contract. A cancellation penalty has to be fair and must take various factors into consideration, which can only be known at the time of cancellation.
In the end, the Ombudsman recommended a total cancellation fee of R1 100, made up of his outstanding fees and a small token penalty. The Ombudsman said a consumer should be able to escape a gym contract with relative ease and without excessive penalties being imposed.
The consumer just has to give his 20 days’ notice in writing and pay a reasonable cancellation penalty with respect to any goods supplied, services provided, or discounts granted.