Preventing unfair terms in health and fitness centre membership

Preventing unfair terms

in health and ﬁtness centre

membership agreements

A guide for the health and ﬁtness industry

Fair Trading

A guide for the health

and ﬁtness industry

Disclaimer

Because this publication avoids the use of legal language, information about the law

may have been expressed in general statements. This guide should not be relied

upon as a substitute for the relevant legislation or professional legal advice.

No part may be reproduced by any process except in accordance with the

provisions of the Copyright Act 1968. For advice on how to reproduce any material

from this publication contact Consumer Affairs Victoria.

Published by Consumer Affairs Victoria

Department of Justice

121 Exhibition Street Melbourne Victoria 3000

Authorised by the Victorian Government

121 Exhibition Street Melbourne Victoria 3000

This Guide explains how Consumer Affairs Victoria

(CAV) applies unfair contract term legislation to

health and ﬁtness centre membership agreements.

The Guide was ﬁrst published in 2009. This edition

takes account of the introduction of the Australian

Consumer Law (ACL).

Unfair contract term legislation became part

of Victoria’s Fair Trading Act 1999 in 2003. This

legislation, the ﬁrst of its kind in Australia, gave

CAV and consumers a new avenue to address

the content of consumer contracts and led to

the introduction of national unfair contract term

legislation into the Trade Practices Act 1974 on 1

July 2010, as part of the ﬁrst part of the ACL

Victoria’s unfair contract term legislation was

repealed when the ACL was applied in Victoria

(and in the other States and Territories) on 1

January 2011, whereupon the ACL version of unfair

contract term legislation now applies nationwide.

For convenience, this Guide will simply refer

to unfair contract term legislation and the ACL

version is reproduced at the end of this Guide.

CAV has reviewed the successive versions of unfair

contract term legislation and has determined that

its conclusions about the unfairness of the health

and ﬁtness centre contracts identiﬁed in this

Guide are unaffected by the changes.

The original version of this Guide was the third

in a series on unfair terms in consumer contracts.

The ﬁrst Guide, Preventing unfair terms in consumer

contracts, which was released in 2003 and

updated in 2007, is of general application. It

has also been updated in 2011 to take account

of the ACL.

Preventing unfair terms in health and ﬁtness centre

agreements – a guide for the health and ﬁtness

industry is based on a sample of membership

1 The words ‘contract’ and ‘agreement’ have the same meaning and are

both used in this document.

agreements that CAV has reviewed. This

industry review was initiated in response to

a number of complaints CAV received about

health and ﬁtness centres. A large number of

the complaints related to the fairness of terms in

membership agreements.

The Guide is also based on the decisions of the

Victorian Civil & Administrative Tribunal (VCAT)

in Director of Consumer Affairs Victoria v Craig

Langley Pty Ltd and Matrix Pilates and Yoga Pty

Ltd [2008] VCAT 482 (here called “Langley and

Matrix (No.1)”), Director of Consumer Affairs

Victoria v Craig Langley Pty Ltd and Matrix Pilates

and Yoga Pty Ltd [2008] VCAT 1332 (here called

“Langley and Matrix (No.2)”) and Director of

Consumer Affairs Victoria v Trainstation Health

Clubs Pty Ltd [2008] VCAT 2092 (here called “the

Trainstation case”).

This Guide has been designed to help health

and ﬁtness centre operators, legal practitioners

and consumer advocates understand how CAV

will apply unfair contract term legislation to

membership agreements. It includes examples of

the types of terms that may be considered unfair.

However, this is not a deﬁnitive list of what is

unfair under the legislation.

If you are unsure whether a term in a speciﬁc

contract could be considered to be unfair, you

should obtain independent legal advice.

CAV will be actively monitoring compliance with

unfair contract term legislation in the health and

ﬁtness centre industry.

CAV welcomes comments about this Guide. You

can send written comments to the address listed

on the inside front cover.

Preface

Fair Trading

A guide for the health

and ﬁtness industry

Introduction .......................................................................................................................................... 3

Typical unfair terms in health and ﬁtness centre membership agreements ............................................ 7

Unilateral variation clauses .................................................................................................................. 14

Direct debiting of membership fees .................................................................................................... 24

Australian Consumer Law unfair contract term legislation ................................................................... 30

Contents

Consumer Affairs Victoria (CAV) has written this

Guide to explain why it considers that some

common terms used in health and ﬁtness centre

membership agreements are unfair.

The Guide represents the views of CAV and

outlines the basis on which it is likely to take

enforcement action. It is, of course, ultimately for

the courts

to decide if a term is unfair.

This Guide aims to increase the understanding

of unfair contract term legislation in the context

of the health and ﬁtness centre industry and

to promote the removal of unfair terms from

membership agreements. Its purpose is not to

regulate the industry but to serve as a Guide to

the application of unfair contract term legislation

so that the market can function in a fair and open

manner for all of the contracting parties.

CAV believes that fair contracts beneﬁt not

only consumers but also industry because they

encourage consumers to enter the marketplace.

This Guide is designed to help operators of

health and ﬁtness centres and legal practitioners

meet the requirements of unfair contract term

legislation. CAV expects those who use standard-

form agreements in the industry to review their

terms and conditions in the light of this Guide

and amend or remove any unfair terms from

these contracts.

2 In Victoria, the Victorian Civil and Administrative Tribunal also has unfair

contract term jurisdiction

What unfair contract term

legislation applies to which

contracts?

For consumer contracts entered into between

9 October 2003 and 30 June 2010, the original

unfair contract term legislation in the Fair Trading

Act applies.

For consumer contracts entered into or renewed

between 1 July 2010 and 1 January 2011, when

the Australian Consumer Law (ACL) applies

in Victoria, the current unfair contract term

legislation in the Fair Trading Act (nationally

aligned provisions) and the Trade Practices Act

version apply

For consumer contracts entered into or renewed

after 1 January 2011, when the Fair Trading Act

provisions have been repealed, the ACL version

will apply

3 And to any term of a pre-1 July 2010 contract that is varied between

those dates.

4 And to any term of a pre-1 January 2011 contract that is varied after

that date

Introduction

Fair Trading

A guide for the health

and ﬁtness industry

How does unfair contract

term legislation work?

The legislation empowers consumers and the

Director of Consumer Affairs Victoria to seek

from a Victorian court or the Victorian Civil and

Administrative Tribunal (VCAT) a declaration

that a term in a consumer contract is unfair, an

injunction against the relevant trader using the

term in its consumer contracts and remedial

orders for any losses suffered. It also empowers

the Australian Competition and Consumer

Commission (ACCC) and the Australian Securities

and Investments Commission (ASIC) to seek such

remedies in State and Territory courts and the

Federal Court.

Enforcement of unfair contract term legislation

at the regulator level will be shared between the

ACCC, ASIC, and the State and Territory consumer

protection agencies. These agencies will work

together to ensure a consistent approach to

compliance and enforcement.

What is an unfair term?

A term is unfair if:

• it causes a signiﬁcant imbalance in the parties’

rights and obligations under the contract

• it is not reasonably necessary to protect a

legitimate interest of the trader

• it would cause detriment to the consumer

• it is contained in a standard-form consumer

contract.

In assessing whether a term is unfair, the

legislation requires that:

• the contract as a whole be taken into account,

including any countervailing favourable terms

• the transparency of the term be taken into

account ie whether the term is:

- expressed in reasonably plain language

- legible

- presented clearly

- readily available to the consumer

However, any term that deﬁnes the main subject

matter of the contract, or that sets the up-front

price, or that is permitted by another law is not

subject to the legislation.

A term can be unfair regardless of the trader’s

intention or of the fact that it has not been used.

A signiﬁcant imbalance in the parties’ rights and

obligations under the contract is created wherever

a term:

• gives powers to the trader that it would not

otherwise or usually have

• protects the trader in a way that puts the

consumer at a disadvantage

• alters the position under the ordinary rules of

contract or the general law

• shifts risks to the consumer that the trader is

better placed to manage.

The legislation sets out the following (non –

exhaustive) examples of terms that may be unfair:

• a term that permits the supplier but not the

consumer to avoid or limit performance of

the contract

• a term that permits the supplier but not the

consumer to terminate the contracts

• a term that penalises the consumer but not

the supplier for a breach or termination of

the contract

• a term that permits the supplier but not the

consumer to vary the terms of the contract

• a term that permits the supplier but not the

consumer to renew or not renew the contract

• a term that permits the supplier to vary the

price without the right of the consumer to

terminate the contract

• a term that permits the supplier unilaterally

to vary the characteristics of the goods or

services to be supplied under the contract

• a term that permits the supplier unilaterally

to determine whether the contract has been

breached or to interpret its meaning

• a term that limits the supplier’s vicarious

liability for its agents

• a term that permits the supplier to assign the

contract to the consumer’s detriment without

the consumer’s consent

• a term that limits the consumer’s right to sue

the supplier

• a term that limits the evidence the

consumer can produce in legal proceedings

on the contract

• a term that imposes the evidential burden on

the consumer in such legal proceedings.

What is a ‘standard-form’

‘consumer contract’?

A ‘consumer contract’ is one for the supply of

goods or services to an individual consumer

(ie not to a company) who buys them wholly

or predominantly for personal, domestic or

household use or consumption.

What constitutes a ‘standard form’ consumer

contract is not speciﬁed in the legislation but is

essentially a pre-prepared contract that a trader

uses for its customers which is not open to

negotiation by the consumer. When assessing

whether a contract is a ‘standard form’ contract,

the following factors are taken into consideration:

• whether the supplier has all or most of the

bargaining power

• whether the contract was prepared by the

supplier before any discussion relating to the

transaction occurred with the consumer

• whether the consumer was, in effect,

• required either to accept or reject the terms

of the contract in the form in which they

were presented

• whether the consumer was given an

effective opportunity to negotiate the terms

of the contract

• whether the terms of the contract take into

account the speciﬁc characteristics of the

consumer or the particular transaction

What is the effect of an

unfair term?

If a term is declared to be unfair, it is void but the

contract continues to bind the parties unless it is

incapable of operating without the unfair term.

What is the process

that Consumer Affairs

Victoria follows?

CAV will determine what enforcement action

will be taken, applying the criteria set out in its

published Compliance and Enforcement Policy.

By taking enforcement action, CAV aims to

change marketplace behaviour to promote

compliance with the legislation and stop

offending behaviour. To raise consumer and

supplier awareness of the law, CAV will publicise

successful enforcement outcomes and issue media

alerts and warnings.

Will this Guide protect

me from having a term

made void?

This Guide cannot protect a trader from having a

term in its agreement declared unfair by a court

or VCAT, but it does provide an indication of the

approach of CAV to the legislation. If you are

unsure whether a term is unfair, you should obtain

independent legal advice.

Fair Trading

A guide for the health

and ﬁtness industry

Glossary

In this Guide:

• references to ‘unfair contract term

legislation’ mean:

- the legislation in Part 2-3 of Schedule 2 of

the Trade Practices Act 1974 (until that is

replaced by Part 2-3 of Schedule 2 of the

Competition and Consumer Act 2010 on

1 January 2011)

- that Part as applied in Victoria under the

ACL on 1 January 2011

- the legislation in Part 2B of the Fair Trading

Act 1999 (Vic) until Part 2B is repealed

and replaced by the ACL version on

- 1 January 2011

• references to ‘consumer guarantees’ in

relation to defective goods or services mean:

- the consumer guarantees set out in

Division 1 of Part 3-2 of Schedule 2 of

the Trade Practices Act 1974 (until that is

replaced by Division 1 of Part 3-2 of the

Competition and Consumer Act 2010 on

1 January 2011)

- that Division as applied in Victoria under

the ACL on 1 January 2011

- the implied warranties set out in Part 2A

of the Fair Trading Act 1999 (Vic) until Part

2A is repealed and replaced by the ACL

consumer guarantees on 1 January 2011.

This section explores the areas of health and

ﬁtness membership agreements in which CAV

most often found terms that it considered unfair.

It includes examples of unfair terms.

Most health and ﬁtness centre agreements cover

similar subject matter. For example, they generally

include membership categories, payment

options, minimum term structure, termination of

agreement, liability and centre rules. However,

the order in which these issues are addressed in

membership agreements varies.

Casual cards or forms and preexercise

questionnaires are often considered to

be contractual, so this guide also covers

these documents.

General

A health and ﬁtness centre agreement needs to

be in writing and, if in parts, these should be

packaged together. All health and ﬁtness centre

agreements should clearly state the health and

ﬁtness centre’s obligations to the consumer,

including a description of membership types,

the facilities and services on offer. Very few

membership agreements reviewed by CAV

contained an explicit statement of the services

being provided by the health and ﬁtness centre.

The agreements were almost exclusively a

statement of the consumer’s obligations to

the centre.

Most health and ﬁtness centres have rules, a

code of conduct or statement of etiquette to

guide consumers’ behaviour while they are at

the centre. Any rules should be included in or

attached to the membership agreement, together

with the privacy policy. All applicable fees,

such as those for child care or lockers, should

be itemised in the agreement. The agreement

should be clearly distinguishable from marketing

(noncontractual) material.

Consumers should be given the opportunity

to read the entire contract before signing it.

In its review of membership agreements, CAV

found terms that suggested that consumers were

only given a copy of the contract after joining.

For example, the following term appeared in

a contract:

Thank you for becoming of member of X health and

ﬁtness centre.

Consumers should always be given a copy of the

completed contract (bearing their signature) after

they have joined the centre.

Where the agreement is signed as part of a ‘trial

period’ promotion, the terms of the contract need

to clearly state:

• start and end dates of the trial, and

• what will happen at the end of the

trial period.

The consumer must be presented with a clear,

unambiguous choice about whether they

continue as a member at the end of the trial.

5 Traders will need to take advice to ensure that trial period promotions

are not misleading or deceptive.

Typical unfair terms in

health and ﬁtness centre

membership agreements

Fair Trading

A guide for the health

and ﬁtness industry

Membership categories

Many health and ﬁtness centres offer a variety of

membership categories. CAV’s review revealed

that membership categories were sometimes

poorly explained. This makes it difﬁcult for

consumers to understand the differences

between the categories and the signiﬁcance

of those differences.

Membership categories should include relevant

information about:

• the range of services and facilities to which

the member has access

• the times during which the member has

access to those services and facilities

• membership payment methods

• how to cancel the contract, and

• the cost of cancellation.

Minimum terms

Most of the health and ﬁtness centre agreements

reviewed by CAV referred to a ‘minimum term’,

‘minimum period’, ‘minimum agreement period’,

‘ﬁxed minimum term’ or ‘agreed term’. These

refer to the minimum amount of time that the

consumer has committed to be a member of the

health and ﬁtness centre and to pay membership

fees. (For the purposes of this guide, ‘minimum

term’ will be used to describe this concept.)

CAV found minimum terms of between three

and 12 months in the health and ﬁtness

contracts reviewed.

Minimum terms are an alternative to ‘payasyougo’

or ‘monthtomonth’ memberships. Typically, the

advantage of a minimum term contract is that

it has lower monthly membership fees than a

‘monthtomonth’ contract.

CAV does not consider ‘minimum terms’ to

be unfair.

Minimum term

memberships and

automatic renewal

Minimum term memberships are often used in

conjunction with an ‘automatic renewal’ function

in a way CAV considers unfair. Typically, when

a consumer’s minimum term expires, his or her

membership is automatically renewed. Some

agreements allow consumers to advise at the time

of signing that they do not wish the agreement

to be automatically renewed, but many offer

no choice. A contract that is automatically

renewed usually becomes an ‘ongoing’ or a

‘monthtomonth’ contract. (It is usually not the

case that the consumer is locked into another

membership period equal to the length of his/her

membership term, which would clearly be unfair).

Typically, the consumer is not notiﬁed when

this occurs.

Many consumers do not appear to understand

the concept of automaticallyrenewing,

minimumterm memberships. This is evidenced by

the large number of complaints lodged with CAV

by consumers under the impression that their

memberships would automatically terminate at the

conclusion of the minimum term.

In the Langley and Matrix (No.2) case, the

front of the membership agreement Terms

and Conditions document provided for the

commencement and expiry dates of the

minimum term to be inserted. With respect to

this, Judge Harbison stated that “a consumer

entering into the Matrix Membership Agreement

might quite properly think that the agreement

expires on the date which has been inserted into the

Membership Agreement as being the date of expiry

of the minimum term” (emphasis added) (Reasons

paragraph 46).

CAV has serious concerns about any contract that

locks a consumer into subsequent purchases.

Consumer Affairs Victoria considers that if an

automaticallyrenewing minimum term is to be

included in a membership agreement, compliance

with the the legislation requires:

• consumers to be given a choice in both the

application form and the contract between

their membership terminating at the end

of the minimum term and it automatically

renewing at the end of the minimum term

• the application form to require consumers

to ‘opt in’ to having their memberships

automatically renewed at the end of

the minimum term. (This means that

if the consumer does not select the

automaticallyrenewing minimum term option,

his or her membership will automatically

terminate at the end of the minimum term.)

• the consumer documents, particularly

the application form, to speciﬁcally draw

consumers’ attention to the choice between

memberships that automatically renew versus

those that automatically terminate at the end

of the minimum term, and

• a reminder notice to be sent to consumers

whose memberships will automatically renew

at the end of the minimum term. To serve

its purpose, this notice must be sent close to

the expiry of the minimum term. However,

it must also be sent sufﬁciently in advance to

enable consumers to comply with any notice

periods required by the contract.

In the Langley and Matrix (No.1) case, the

following term was found to be unfair because,

among other reasons, “it provides for automatic

renewal of the contract on a periodic basis with no

provision for consumers to prevent same…thereby

creating a signiﬁcant imbalance in the parties’

rights and obligations arising under the Craig

Langley Membership agreement to the detriment

of the consumer” (Orders paragraph 5).

I understand that after the minimum term has

been completed, the instalments will continue

automatically giving me the right to use the

club and its services as per the minimum term

agreement and will continue at the instalment rate

and frequency as detailed in ‘payment terms’ until

such time as the Member provides to the Billing

Agent written notiﬁcation 30 days prior to terminate

this agreement.

(Orders paragraph 5)

In the Langley and Matrix (No.2) case, where

the front of the membership agreement

Terms and Conditions document provided for

the commencement and expiry dates of the

minimum term to be inserted, Judge Harbison

found the following terms to be unfair:

We reserve the right at any time after the minimum

term on a contract, to increase the fees to be

charged, and will give written notice to the most

current address you have provided at least one

month prior to this occurring.

You can terminate your Membership after the

minimum term by giving us 30 days notice in writing.

I/we acknowledge that the business is to provide

14 days notice if proposing to vary the terms of a

debit arrangement.

(Declaration 5(i), (ii), (iii))

Judge Harbison stated that the terms

“presume that the agreement will continue

past the expiry date unless the consumer takes

active steps by giving notice of termination

to avoid this happening. The effect of these

clauses is that if the consumer does not take any

action after the expiry date then the agreement

continues. The clauses convert what appears to

be a contract for a ﬁxed period into a contract for

an indeﬁnite period” (emphasis added) (Reasons

paragraph 48).

Fair Trading

A guide for the health

and ﬁtness industry

Cancellation of

membership agreements

A signiﬁcant number of the complaints lodged

with CAV about health and ﬁtness centres concern

the cancellation of membership agreements.

In its review CAV found that many cancellation

terms which it considered unfair, were also not

clearly expressed.

All health and ﬁtness centre membership

agreements should have fair, prominentlyﬂagged

terms that clearly explain how consumers can

cancel their memberships.

Cancellation by

the consumer

Written notice

Consumers should be able to cancel their

memberships by written notice to the health and

ﬁtness centre.

A number of contracts reviewed by CAV stated

that the contract could only be terminated upon

the completion of a speciﬁc cancellation form

provided by the centre. Some contracts even

required that members made appointments

to complete the particular cancellation form in

person. For example:

Any cancellation must be notiﬁed on the required

form supplied by us.

You can terminate your monthly deduction at

any time, with a minimum notice of 30 days,

by completing in person, by appointment, the X

cancellation notice …

CAV considers that requirements to ﬁll in speciﬁc

forms and/or complete certain procedures

to cancel a contract constitute unnecessary

formalities and are unfair. Cancellation forms may

be provided for consumers, but their use should

be optional.

Cancellation when fees owing

CAV also found that some centres would not

accept or process a request for termination by a

member unless all fees were paid and uptodate.

For example:

At the time of lodgement of the cancellation form,

your membership fees must be paid up to date. …

So there can be no mistake, for your membership

cancellation to be effective, all your membership

fees must be paid up to date and on the date you

give notice AND you must pay or make satisfactory

arrangements to pay all membership fees for the

period from the date of notice until the date it takes

effect. Should you have outstanding fees, your

cancellation will not be processed and you will

have to reapply to cancel in writing once payment is

up to date.

Any amounts owed to the Company by the member

must be paid prior to the cancellation of the

membership agreement.

CAV considers the above clauses unfair. It is

strongly opposed to such clauses because they

could lead to spiralling debt for the consumer.

A membership contract should terminate upon

written notice by the consumer to the health and

ﬁtness centre, allowing for any notiﬁcation period.

Any outstanding fees can still be pursued from the

member once the contract is terminated.

When cancellation

becomes effective

Some contracts reviewed by CAV stipulated that

termination was not effective until the member

had received written conﬁrmation from the health

and ﬁtness centre. For example:

The Customer shall not consider this contract has

been terminated until such time as this is conﬁrmed

in writing to the Customer by X.

Your cancellation will not take effect until we give

you a copy of your cancellation notice and receipt for

payment of all required fees both of which we will

provide promptly.

CAV considers the above terms to be unfair. The

contract should be terminated upon written

notice by the consumer to the health and ﬁtness

centre, allowing for any notiﬁcation period.

Cancellation for

automaticallyrenewing,

minimumterm

memberships

Consumers who have signed up for

automaticallyrenewing, minimumterm

memberships should be able to prevent the

automatic renewal from taking place at the

time of signing the contract. Some health and

ﬁtness centre membership agreements require

consumers to wait until the minimum term

has expired before they can give notice of

cancellation. When combined with the typical

notice period of 30 days, this effectively extends

the contract 30 days beyond the minimum period

for which the consumer thought he or she was

contracted. This is considered unfair by CAV.

Consumers who have automaticallyrenewing,

minimumterm contracts should be able to give

notice before the minimum term expiry date,

allowing for any notiﬁcation period, so that their

membership will terminate when the minimum

term expires.

In the Trainstation case ,the following term was

declared unfair because, among other reasons, “it

implicitly provides for automatic renewal of the

agreement, on a monthly basis, after the term

or period of the agreement has expired, with no

provision for the relevant consumer to prevent

the same from happening without incurring a

cancellation fee

or having to pay one month’s

6 Term 3b of the Trainstation contract stated that “The Customer may

terminate this contract before the expiry of the minimum term…by

provision of 1 full calendar month of notice in writing, accompanied by a

payment of a cancellation fee…”.

membership fees. The term thus transforms

an apparently 12month minimum term into a

13month minimum term, and an apparently

twomonth minimum term into a threemonth

minimum term, thereby creating a signiﬁcant

imbalance in the parties rights and obligations

arising under the Trainstation Membership

Agreement to the detriment of the consumer”

(Declaration paragraph 6(e)(f)).

The unfair term read:

3a. The Customer may terminate this Contract on

or after the expiry of the minimum term, provided

that all instalments and fees due up to the date of

termination are paid, by provision of one full calendar

month notice in writing.

Cancellation within the

minimum term

Contracts reviewed by CAV tended not to allow

consumers to terminate their membership

agreements within the minimum term. Where it

was permitted, consumers were often required to

pay out the entire contract. For example:

Any obligation to a minimum agreement period must

be honoured in full… Memberships may only be

cancelled after the minimum agreement period.

Where a minimum term membership has been

entered into, cancellation can only occur after the

minimum term has expired or the minimum term

payment has been paid out in full.

CAV considers that a requirement for consumers

to pay out the entire contract – in other

words, make all payments until the minimum

term expires – is likely to be unfair. The fee

charged upon a consumer’s voluntary cancellation

should be a genuine preestimate of the service

provider’s costs.

Even a fee of 50% of the balance owed under

a contract has been held not to be a genuine

preestimate of a ﬁtness centre’s loss arising from

early cancellation (Langley and Matrix (No.1)

case paragraph 6).

Fair Trading

A guide for the health

and ﬁtness industry

Cancellation by the

health and ﬁtness centre

for breach of contract by

the consumer

In the Trainstation case, the parts of the following

clauses that relate to the breach of the centre’s

rules and regulations (bold) were not found to be

unfair (Reasons paragraphs 165174):

Termination of Contract by the Operator: The

operator may terminate entitlement to use the

services provided by the operator for any customer if

the customer fails to comply with the operator’s rules

and regulations.

Entitlement: The operator may terminate entitlement

to use the services provided by the operator for any

customer if the customer fails to comply with the

operator’s rules and regulations; or if the customer, in

the opinion of the operator behaves in a disorderly or

offences manner, whether verbal or physical, towards

staff or other customers.

(Reasons paragraphs 165174)

CAV however considers it is good practice

for health and ﬁtness centres to give notice

to consumers to allow them the opportunity

to remedy.

Payment default

Most membership agreements reviewed

contained provisions allowing health and ﬁtness

centres to take action against members who

default on payments. The consequences for

default in the payment of fees included:

• immediate termination of membership

• a requirement to pay out the entire contract

immediately. (For example, if there were six

months remaining in the minimum term

with payments being made each month,

all remaining payments would immediately

become due)

• immediate notiﬁcation of the default to a

credit reporting agency

• immediate referral of the debt to a debt

collection agency, and

• the charging of discretionary and at times

multiple fees (refer to Late fees below).

CAV considers all these consequences, whether

applied individually or in combination, to be

unfair, regardless of whether the consumer paid

upfront or is paying in instalments. A consumer

may have withheld payment because he/she

disputes the obligation to make it, for example,

because the trader has breached the contract.

In the Langley and Matrix (No.2) case, the

following terms were declared unfair because

among other reasons, they penalised the

consumer but not the centre for a breach or

termination of the contract, thereby creating

a signiﬁcant imbalance in the parties’ rights

and obligations arising under the membership

agreement, to the detriment of the consumer

(Declaration paragraph 2(e)(i)). Judge Harbison

stated that the problem with the clauses is “that

they presume that the consumer has failed

to pay the fee on time without having a valid

reason doing so” and they “effectively prevent

a consumer from withholding payment even if

the trader does not fulﬁl its part of the bargain”

(Reasons paragraph 38).

…If fees are not paid on the due date, you agree

that we may continue to debit the nominated

account with the total amount due without notice

to you (we will endeavour to contact you prior to

effecting such payment)…

In the event that you do not pay the amount payable

under this Agreement within 31 calendar days of the

due date expressed on the Agreement, the Club and

the Billing Agent may at their discretion terminate

the Membership and this Agreement. Upon

such termination of this Agreement, all amounts

outstanding shall become immediately due and

payable without further notice of demand…

(Declaration paragraph 2(i), (ii))

In the Trainstation case, the following terms were

declared unfair because among other reasons:

• they provided an unqualiﬁed and substantial

right reserved to the centre that could be

triggered by a disproportionately minor

breach by the consumer

• they penalised the consumer, but not the

centre, for a breach of the agreement.

The terms thereby created a signiﬁcant imbalance

in the parties’ rights and obligations arising under

the membership agreement to the detriment of

the consumer (Declaration paragraph 5(a)).

The terms read:

Termination of Contract by the Operator: The

Operator may terminate entitlement to use the

services provided by the Operator for any Customer

…if the Customer fails to make payments of any

amount on the due date.

Entitlement: The Operator may terminate entitlement

to use of the services provided by the Operator for

any Customer if the customer…fails to make payment

of any amount due on the due date.

(Declaration paragraph 5)

Other examples of payment default terms that

CAV considers unfair are as follows:

Default in payment of any agreed payment terms,

either by part payment or direct debit, renders the

full amount of any outstanding monies due and

payable immediately.

The Customer authorises X to notify any debt

collection/credit report agency upon default by the

Customer in regard to any obligation under this

Contract. Should this occur then at X’s sole discretion

it may terminate the contract at which time the

full outstanding balance for the remainder of the

minimum term or payments including any current

arrears shall be immediately due in full. In addition

X shall add $50 to the outstanding debt as its fee for

dealing with the defaulting member. The Customer

authorizes X to add any further amount to the

outstanding debt that might be reasonably incurred

by X in collecting the outstanding debt, including

addition of an amount equivalent to 25% of the

full outstanding balance for the remainder of the

minimum term or payments including any current

arrears upon initial referral to the debt collection/

credit reporting agency.

Management reserves the right to alter the length

of the membership or cancel it completely, without

notice, if a member fails to complete payment.

CAV considers that in the event of a payment

default, the consumer should be notiﬁed in

writing. The consumer should also be given a

deﬁned and reasonable period of time in which to

remedy the default. This process should be clearly

spelled out in the contract.

If ultimately the consumer’s contract is terminated

as a result of a payment default, notiﬁcation of

that termination and of any other actions taken

by the health and ﬁtness centre or billing services

provider, such as the referral of the debt to a debt

collection agency, should be given.

Late fees

Where a membership contract stipulates that a

late fee will be charged in the event of payment

default, that amount should be speciﬁed. The

late fee should reﬂect the cost to the centre of the

member’s late payment. Where the late fee does

not reﬂect actual costs to the health and ﬁtness

centre, the term may be considered unfair.

Access to the health and

ﬁtness centre

Some membership agreements reviewed by CAV

clearly stated that a member whose fees were

outstanding would be suspended from using the

facilities until those fees had been paid. CAV does

not consider such clauses to be unfair.

Fair Trading

A guide for the health

and ﬁtness industry

Most health and ﬁtness centre membership

agreements reviewed by CAV contained one or

more ‘unilateral variation’ clauses. These are clauses

that allow a health and ﬁtness centre to vary items

such as the goods and services supplied under the

contract, the price of those goods and services and

the terms of the contract itself, while still binding

the consumer to the contract.

CAV has serious concerns about unrestricted

unilateral variation clauses in membership

agreements – particularly in ﬁxed term

agreements. Consumers have a right to receive

the goods or services for which they originally

contracted. CAV considers that membership fees

and the terms of a contract should not be changed

during the minimum term. In the Langley and

Matrix (No.2) case, the following term was

declared unfair. Judge Harbison stated: “In my

view, this term is unfair because it renders the

bargain between the parties as to the price to

be paid by the consumer meaningless” (Reasons

paragraph 30).

I/We authorise the business to vary the amount of

the payments from time to time as provided for in the

business agreement. I/We authorise Ezi Debit to vary

the amount of the payments upon instructions of the

Business. I/We do not require Ezi Debit to notify me/

us of such variations to the debit amount.

(Declaration paragraph 2(iii))

Other examples of unilateral variation terms that

CAV considers unfair are as follows:

Management reserves the right to:

• Suspend or expel without refund any person

whose conduct is deemed improper or in any

way detrimental to the Centre.

• Close off any part of the premises or any piece

of equipment for maintenance (or for any

reason) at any time. The centre will not be held

responsible or liable for such occurrences.

• Regulate the hours of opening and closing in

accordance with the requirements of the centre.

• Amend any fees or charges without notice.

• Alter class timetable without notice.

• Change the Centre rules without notice.

Availability of Centres & Facilities

• X may delete, change, discontinue, repair or

replace any part or all of the centre or centres or

any facilities without any effect on this agreement.

Membership types and categories may change from

time to time at the sole discretion of management.

Alternatively, unilateral variation clauses can

be separated into discrete clauses. In that case,

a court may ﬁnd a clause allowing unilateral

variation to the rules for example to be fair

(Trainstation case paragraphs 99125). CAV

considers the discretion of the health and ﬁtness

centre should always be reasonable.

CAV appreciates that change is occasionally

unavoidable. Where the contract contains a

right to make changes, those changes should

be conﬁned to objectively veriﬁable occurrences

where possible (for example, a change to laws or

health regulations), speciﬁc and clearly spelled

out. Where signiﬁcant change is unavoidable,

health and ﬁtness centres should provide

individual, written notice to members in advance.

When the consumer is adversely affected by

the change, he or she should have the right to

terminate his or her contract without penalty.

Unilateral variation

clauses

The notice to consumers advising of the

forthcoming change should alert them to the option

of terminating their membership without penalty.

Notice of the change needs to be given

sufﬁciently in advance to allow the consumer

to terminate his or her membership before the

changes are implemented. This means that

the amount of notice given to consumers of a

forthcoming change needs to be greater than

the amount of notice they are required to give

to cancel their membership agreements. The

following terms were found to be unfair in the

Langley and Matrix (No.2) case because, among

other reasons, they enabled the increase in fees

to be effective immediately upon expiry of the

minimum term, but restricted the ability of the

relevant consumer to give 30 days’ notice of

cancellation until after the expiry of the minimum

term, thereby creating a signiﬁcant imbalance in

the parties’ rights and obligations arising under

the membership agreement, to the detriment of

the consumer (Declaration paragraph 5(a)).

We reserve the right at any time after the minimum

term on a contract, to increase the fees to be

charged, and will give written notice to the most

current address you have provided at least one

month prior to this occurring.

You can terminate your membership after the

minimum term by giving us 30 days notice in writing.

(Declaration paragraph 5(i), (ii))

Where a consumer is terminating his or her

agreement in response to a unilateral variation, no

penalties should be imposed. For example, during

a minimum term, an early termination fee should

not apply.

Liability

Many of the contracts CAV reviewed had terms

addressing liability that were considered to be

unfair. Often terms denied traders’ liability for loss

or damage. For example:

I herein irrevocably and unconditionally release X

and each and all of it’s (sic) workers to the maximum

extent permitted by law from any claim, actions,

suits, demands, proceedings, and causes of action

and any direct, indirect, resulting or consequential

loss, cost, expense or damage of whatsoever kind

which I may incur, suffer, or sustain, whether in

respect of my person or property or otherwise, arising

out of or in connection with my use or access to or

presence in or supervision, instruction, evaluation or

counselling by X or any of the workers in connection

with the Facilities, or during organised exercise

outside the Premises using public streets, footpaths,

parks or beaches or by reason of or arising from the

negligence of X or any of it’s (sic) workers.

CAV’s review of health and ﬁtness centre

contracts found that terms addressing liability in

membership agreements often:

• denied all liability towards consumers,

sometimes only to the extent permitted by

law, but often beyond the extent permitted

by law

• did not provide for compensation to the

consumer where the centre was negligent or

wilfully defaulted

• contained broad indemnities

• placed all risks and responsibilities for using

the health and ﬁtness centre on the consumer,

even where it was more appropriate for such

risks and responsibilities to be borne by the

centre as they were within its control

• deemed something to be the case with the

intent of ensuring that no liability arose, and

• limited consumers’ rights to sue the health

and ﬁtness centre.

Often these terms were not reciprocal.

Consumers have positive rights under the

consumer guarantee provisions of the ACL. The

principal guarantees in this context are that

services are rendered with due care and skill and

are reasonably ﬁt for any speciﬁed purpose.

Fair Trading

A guide for the health

and ﬁtness industry

It is an offence for a supplier to attempt to

exclude, restrict or modify these guarantees or

to limit its liability for a breach (including liability

for economic, indirect and/or consequential loss).

Such terms are void under the legislation. If it is

necessary to decide, CAV would also regard such

terms as unfair.

Many terms that exclude or limit a supplier’s

liability for loss or damage suffered by the

consumer from the supplier’s acts or omissions

attempt to cater for the consumer guarantees only

by indirectly referring to the consumer’s statutory

rights. They do this through the use of phrases

such as ‘to the extent permitted by law’. These

phrases are still likely to be considered by CAV

to be unfair terms. This is because they have the

object or effect of limiting the consumer’s right

to sue the supplier for a breach of a consumer

guarantee. While such terms give the appearance

of complying with the law, they provide no

assistance to those consumers who are unaware of

their statutory rights. For example:

Whilst on the Operator’s premises both my property

and my person shall be at my own risk and I will

not hold the Operator or instructors liable for

personal injury or loss of property whether caused

by negligence of the Operator, its employees or its

agents, or otherwise.

CAV considers these terms may also contravene

the provisions of the ACL that prohibit the making

of a false or misleading representation concerning

the existence, exclusion, or effect of any

condition, warranty, guarantee, right or remedy.

In the Langley and Matrix (No.2) case, Judge

Harbison declared the following term to be unfair

stating that “it presumes that the consumer has

no rights to cancellation of a contract except

in the circumstances set out in that term. So

it purports to do away with the protection

given to a consumer under various consumer

protection laws including the protection of

implied conditions, warranties or remedies under

the FTA…The consumer is misled into thinking

that the only available mechanisms for cancelling

a membership are set out in this term” (Reasons

paragraph 43).

You can only cancel your Membership prior to the

expiry of the minimum term if you become medically

incapacitated, or if you relocate to an area not within

20 kilometres of the studio or if we make changes to

the contract, which adversely affects you.

(Declaration paragraph 4)

In the Trainstation case, the following terms were

found to be unfair because, among other reasons:

• they were inconsistent with the consumer’s

right to terminate the agreement and

seek damages where the centre failed to

supply its services in accordance with the

consumer guarantees

• they had the object or effect of preventing

or deterring the consumer from pursuing

or exercising rights arising from a breach by

the centre of the express or implied terms of

the agreement.

These terms thereby caused a signiﬁcant

imbalance in the parties’ rights and obligations

arising under the membership agreement to

the detriment of the consumer (Declaration

paragraph 3(a)(c)).

The terms read:

Memberships: Memberships are nonrefundable…

Refunds: Refunds, other than rectiﬁcation of an error

made by the Operator, will only be given at the

discretion of the Operator.

(Declaration paragraph 3)

Trainstation submitted that “the terminology

‘no refunds’ is common in the community in a

consumer setting, and is known to mean only that

monies will not be refunded where the refund is

unwarranted” (Reasons paragraph 154). Judge

Harbison did not agree, stating “If the clauses

were meant to only cover a situation where the

consumer had no grounds to seek termination of

the contract, the clauses should have been clearly

expressed in this way” (paragraph 155).

CAV will only regard liability-exclusion terms

as fair or as not breaching the legislation if the

main statutory rights are clearly signposted.

For example:

For consumers, our services come with nonexcludable

guarantees under consumer protection legislation

that they will be provided with due care and skill and

be reasonably ﬁt for any speciﬁed purpose. You are

entitled, at your option, to a refund or the resupply

of the services for a breach, and to compensation for

any other loss.

Liability for death and

personal injury

Many health and ﬁtness centre membership

agreements sought to draw on legislation that

enables providers of recreational services to

limit their liability for a breach of the consumer

guarantees. Under that ‘recreational services’

legislation, suppliers of recreational services can

require consumers to waive their rights to sue

for death or personal injury. Normally, terms

containing waivers of a supplier’s legal obligations

under the consumer guarantees would be

considered unfair. However, unfair contract term

legislation does not apply to terms of consumer

contracts that are required or expressly permitted

by law, but only to the extent required or

permitted. Therefore, a term in a ‘recreational

services’ contract that contains such a waiver

cannot be regarded as unfair provided it is

limited to:

• recreational services, not recreational goods

• participants in those services not spectators

• the recreational service provider’s liability

under the consumer guarantees, and does

not extend to its liability under other laws, for

example, common law negligence

• the defaults of the recreational service

provider short of reckless disregard, and

• waivers that contain the prescribed

consumerwarning notice.

Many agreements reviewed by CAV contained

terms that went beyond these limits and were

considered unfair.

In the Trainstation case, the following terms

were declared unfair because, among other

reasons, they:

• were very broad, unqualiﬁed noliability terms

• gave the centre immunity from liability for

noncontractual causes of action such as

negligence or even breaches of consumer

protection laws

• did not comply with the requirements of the

‘recreational services’ legislation.

These terms thereby created a signiﬁcant

imbalance in the parties’ rights and obligations

arising under the membership agreement to

the detriment of the consumer (Declaration

paragraph 7 (a), (b), (e)).

Limitation of Liability: The Operator and the

Operators (sic) employees and agents shall not be

liable or responsible for:

a) Any loss, damage or theft of any property

(belonging to, or brought into the Club

premises by the Customer, or any guest of

the Customer) on the Club premises.

b) Any death, personal injury or illness

occurring upon the Club premises or as

a result of the use of the facilities and/or

equipment provided by the Club

Club Rules and Regulations:

e) Customers are solely responsible for

their decision to undertake any form of

exercise, and the intensity thereof. The

Operator accepts no responsibility for any

injury or loss suffered as a consequence.

Fair Trading

A guide for the health

and ﬁtness industry

Declaration: Whilst on the Operators (sic) premises

both my property and my person shall be at my

own risk and I will not hold or any of the Operators

(sic) employees, instructors, contractors, suppliers or

agents liable for personal injury or loss of property

whether caused by their actions or otherwise.

(Declaration paragraph 7)

Other examples of liability terms, which did not

comply with the ‘recreational services’ legislation

and which CAV considers unfair are as follows:

I, and if being a minor, my parent/s, guardian/s for

and on behalf of myself, acknowledge that during

such times as I am present on the premises of or

included in any activity external to the premises

which is organised, approved or endorsed by the

Centre as an activity for me to take part in, both

my property and person shall be at my own risk

and I will not hold the Centre liable for any personal

injury or loss of property which may arise from

the negligence of the Centre, its servants, agents,

independent contractors, voluntary workers, other

users of the facility or participants in the activities or

spectators or other parties providing services through

or in the facilities of the Centre.

Assumption of Risk The use of facilities at X naturally

involves the risk of injury to you or your guest whether

you or someone else cause it. As such, you understand

and voluntarily accept this risk and agree that X will

not be liable for any injury whatsoever including

without limitation, personal bodily, or mental injury,

economic loss or any damage to you, your spouse,

partner, guest, unborn child or relatives from the

negligence or other acts or agree to indemnify X

against any claim whatsoever including legal costs

commenced by yourself or other parties referred to

above as a result of the use of the facilities at X.

Wet Area Usage – You and your Guests may use all

wet areas including but not limited to the swimming

pool, sauna, steam, monsoon shower etc. These

areas are unsupervised and you use them at your

own risk.

Most membership agreements seeking to draw

on the ‘recreational services’ legislation did not

track the legislation exactly as required. Typically,

the waivers did not contain the prescribed

consumer warning notice. CAV considers such

terms unfair. Also, without the prescribed

consumer warning notice, recreational service

providers are unlikely to gain the protection of the

waiver they seek to apply.

Suppliers seeking a waiver from consumers must

include one of the consumer warnings set out

in the ‘recreational services’ legislation.. The

warnings alert consumers that they are being

asked to agree to waive some of their rights under

the consumer guarantees. The term must also be

brought to the attention of the consumer prior to

the supply of the recreational service. Suppliers

who want a waiver under the ‘recreational

services’ legislation should seek legal advice.

Casual users and guests

Many health and ﬁtness centres allow consumers

to use the facilities on a casual basis and also

allow members to bring guests. In these cases,

the casual user is not usually required to complete

a membership application form and contract.

Instead, he or she may be required to ﬁll out

documentation for example a ‘casual card’ or

‘preexercise questionnaire’.

Health and ﬁtness centres usually want the

‘recreational services’ legislation waiver to apply

to casual users and members’ guests. But in its

review of health and ﬁtness centre contracts, CAV

found that most documents for occasional users

did not contain the particulars required by the

‘recreational services’ legislation. CAV stresses that

health and ﬁtness centres must provide occasional

users with the prescribed warnings.

Liability other than for

death and personal injury

Representations

Health and ﬁtness centres are responsible for the

actions and representations of their employees

and agents. However, many terms in the

membership agreements reviewed sought to

exclude or limit the supplier’s liability in this area.

In the Trainstation case, the following term

was declared unfair because, among other

reasons, it operated to deny the consumer’s

rights under the consumer guarantees (Reasons

paragraph 163) and purported to exclude

oral representations made to a consumer

(Declaration paragraph 4(c)).

Entire Agreement: The Membership Agreement

together with the Membership Terms and

Conditions Schedule, the Privacy Statement and

the Direct Debit Service Agreement constitutes the

entire agreement, understanding and arrangement

(express or implied) between the Customer and

the Operator relating to the subject matter of this

Contract and supersedes and cancels any previous

agreement, understanding and arrangement

relating thereto whether written or oral.

(Declaration paragraph 4)

Other examples of terms about representations

that CAV considers unfair are as follows:

This Membership Agreement embodies the entire

agreement and understanding between the parties

concerning its subject matter and succeeds and

cancels all other agreements and understandings

concerning the subject matter of this Membership

Agreement and any warranty, representation,

guarantee or other term and condition of any nature

not contained in this Membership Agreement is of no

force or effect.

You acknowledge that neither X nor anyone else,

made any representations or promises upon which

you relied that are not stated in this agreement.

It is important that the terms of the contract between

you and us are clear and for this reason, if there is

any conﬂict between what is set out in this booklet

and anything you have been told at the club or over

the telephone, the terms in this booklet will prevail.

Indemnities

CAV encountered indemnities in a number

of the health and ﬁtness centre membership

agreements reviewed. Wide indemnities that

do not match the scope of a fair waiver (refer to

Liability for death and personal injury on page

15) are considered unfair and should be removed

from membership agreements.

In the Langley and Matrix (No.1) case, the

following term was declared unfair because,

among other reasons, it:

• was a broad, unqualiﬁed and ambiguous

exclusion clause (Orders paragraph 2(a))

• exempted, excused or saved the centre from

all liability for any breach of contract (except

as may be precluded by statute) without any,

or any corresponding reciprocity or offset for

the consumer (Orders paragraph 2(b)).

The term thereby created a signiﬁcant imbalance

in the parties’ rights and obligations arising under

the membership agreement to the detriment of

the consumer.

As a member I speciﬁcally release, indemnify and

hold harmless the club, its management and

employees, in consideration of the acceptance of my

payment for participating in the activity (and except

that the same may be precluded by statute), with

respect to any and all events resulting in injury, loss,

damage or death to me or my property, whether

by negligence, breach of contract, in any way

whatsoever, which might otherwise have given rise to

action against the club by myself or on my behalf or

by other parties. I also understand that in the event

that I am injured or my property is damaged, that I

will bring no claim, legal or otherwise against Matrix

Pilates and Yoga, its owners, servants or agents.

(Orders paragraph 2)

Fair Trading

A guide for the health

and ﬁtness industry

Other terms containing indemnities that CAV

considers unfair are:

As such, you understand and voluntarily…agree to

indemnify X against any claim whatsoever including

legal costs commenced by yourself or other parties

referred to above as a result of the use of the facilities

at X.

I hereby certify that I have voluntarily elected to

participate in exercise/s at X and do not hold

this organization or the people involved in the

organization, responsible for, and indemnify them

from, any personal injury, loss or damage which may

occur as a result of my attendance at ‘The Club’.

Liability for property

Many health and ﬁtness centre membership

agreements reviewed by CAV sought

inappropriately to exclude a health and ﬁtness

centre’s liability for consumers’ personal property,

in particular, personal property secured in lockers

and vehicles in centre car parks. The supplier is

liable at law for damage or loss caused through

its own fault or negligence, and any clause which

implies exclusion of liability for loss to property in

all circumstances is considered unfair.

In the Trainstation case, the following term was

declared unfair because among other reasons

it purported to exclude, restrict or modify,

or purported to have the effect of excluding,

restricting or modifying the consumer guarantees,

thereby creating a signiﬁcant imbalance in the

parties’ rights and obligations arising under the

membership agreement to the detriment to the

consumer (Declaration paragraph 7(f)).

Limitation of Liability: The Operator and the

Operators (sic) employees and agents shall not be

liable or responsible for:

a) Any loss, damage or theft of any property

(belonging to, or brought into the Club premises by

the Customer, or any guest of the Customer) on the

Club premises…

(Declaration paragraph 7)

Other examples of terms relating to liability for

property that CAV considers unfair are as follows:

Lockers are available for use in some facilities. All

care is taken, however the centre does not accept

responsibility for items, which are lost/stolen from

lockers. Bags are not permitted in the health club

except to be placed in lockers provided.

Lockers – Lockers are provided for use whilst

exercising and will be cleared daily once the club is

closed. Please be advised that the lockers provided

are not security lockers and therefore we request all

valuable items are carried. Whilst care is taken to

safeguard locker contents, thefts can occur. Please

be aware that X does not accept responsibility

for any loss or damage to property. When using

lockers, please ensure that the locker key is secure

at all times on your person. (Reception can supply

a safety pin for this purpose, however, we do

strongly suggest the keys should be pinned INSIDE

a pocket). Should a locker key be lost or contents

be left in a locker overnight, there is a $25 charge

for replacement of the key/return of items. If your

belongings are left in a locker overnight, they

may be removed and the Company will take no

responsibility for loss or damage.

CAV considers that health and ﬁtness centres

should provide secure storage facilities for users’

personal effects such as wallets and clothing.

Health and ﬁtness centres are obliged under the

consumer guarantees to provide these services

with due care and skill, and ensure that the

services are ﬁt for any speciﬁed purpose.

CAV agrees that consumers should not

unnecessarily bring valuable items into health

and ﬁtness centres.

Provision of health and

ﬁtness advice

Many health and ﬁtness centres require users

to undergo a ‘health check’ or complete a

‘preexercise questionnaire’ before they use the

facilities. Many centres design exercise programs

for members and offer personal training services.

Consumers often ask centre staff questions

about ﬁtness and the equipment while using

the facilities.

Despite this, many of the health and ﬁtness

club membership agreements reviewed by

CAV contained clauses requiring consumers to

acknowledge that centre staff had not provided

and would not provide any advice about a

member’s health, physical ﬁtness, or his or her

ability to use the facilities or to engage in active or

passive exercise. For example:

Representation – You represent that you are in

good physical condition and have no complaint,

impairment or disability that may prevent you from

using all of X’s facilities. As such you acknowledge

that X did not give you medical advice before you

joined, and cannot give you any after you join,

relating to your physical condition and ability to

use the facilities. If you have any health or medical

concerns now or after you join, discuss them with

your doctor before using the facilities.

CAV considers this unfair as the purpose of health

and ﬁtness centres is to help users improve

their health and ﬁtness. Requiring consumers

to acknowledge that centres have not provided

and will not provide any advice to members’ on

matters such as their physical ﬁtness or ability to

use the facilities is unfair. This is an example of

a supplier ‘deeming’ something to be the case,

whether it is or not, with the intent of ensuring

that no liability arises.

Members’ health

CAV found that ‘health checks’ or ‘preexercise

questionnaires’ often asked consumers to state

that they did not have any medical reason or

condition which meant they should not exercise.

CAV considers this unfair. Consumers should

only be required to state that they know of no

medical reasons.

Limiting the consumer’s

right to sue the health and

ﬁtness centre

In the Trainstation case, the following term was

declared unfair because, among other reasons, it

had the object or effect of limiting the consumer’s

right to sue the centre or the evidence the

consumer could lead in proceedings against the

centre based on the agreement, and thereby

created a signiﬁcant imbalance in the parties’

rights and obligations arising under the centre

membership agreement to the detriment of the

consumer (Declaration paragraph 4d).

Entire Agreement: The Membership Agreement

together with the Membership Terms and Conditions

Schedule, the Privacy Statement and the Direct Debit

Service Agreement constitutes the entire agreement,

understanding and arrangement (express or implied)

between the Customer and the Operator relating to

the subject matter of this Contract and supersedes

and cancels any previous agreement, understanding

and arrangement relating thereto whether written

or oral.

(Declaration paragraph 4)

Fair Trading

A guide for the health

and ﬁtness industry

Other examples of terms that explicitly limit the

consumer’s right to sue the health and ﬁtness

centre that CAV considers unfair are as follows:

I will bring no claim, legal or otherwise against, its

owners, servants or agents.

I also understand that in the event that I am injured

or my property is damaged, that I will bring no

claim, legal or otherwise against X, its owners,

servants or agents.

Many membership agreements reviewed by CAV

also contained terms that could be used to deter

consumers from pursuing their legal rights. This

has the effect of limiting their rights to sue the

health and ﬁtness centre. The terms did this by

‘deeming’ something to be the case, whether it

was or not, with the intent of ensuring that no

liability arose. For example, look at the use of the

verb ‘understand’ in the terms below. This would

deter consumers from exercising their rights

where they did not understand the contract or

relevant term, because its nature and effect was

not explained to them by the supplier.

Before signing this document I have read and

understood it and how it affects my legal rights.

By signing below you agree to all the terms and

conditions on the front and back pages of this

agreement and acknowledge that you understand

the terms and conditions.

I have read and understand my obligations and

rights in relation to this agreement and will abide

by all membership conditions, rules and regulations

stated overleaf.

Whether consumers have read a document is an

objective fact that they can be asked to conﬁrm.

But whether they understood the document is

subjective and ambiguous. Consumers should not

be asked to state that they ‘understand’ the terms

of a contract.

Membership suspension/

on hold

Health and ﬁtness centres often offer consumers

the opportunity to suspend their memberships

– typically for a nominal fee – to accommodate

holidays or periods of sickness. CAV considers

this a valuable response to consumer needs. The

longer the membership term, the more important

it is for centres to provide suspension terms to

accommodate life events.

Some agreements stated that during the

suspension period, membership fees would

continue to be deducted as per usual and the

amount of time the membership was on hold

would be added to the end of the agreement.

CAV considers this to be unfair because in effect,

the consumer is paying when he or she is not

using the service. The consumer should be

charged suspension fees and not membership fees

while his or her membership is on hold. The direct

debit amount should be adjusted accordingly

while the consumer’s membership is on hold.

When health and ﬁtness centres operators were

asked about the ways in which membership

suspensions worked, they typically said onhold

periods did not contribute towards minimum

terms (where relevant). For example, if a

consumer signed up for a 12month minimum

term, he or she would have to pay full fees for 12

months. If he or she suspended the contract for

one month, the new total length of the contract

would be 13 months. However, often this was

not clearly spelled out to consumers in the terms

on suspension.

Privacy

Sales Calls

Many health and ﬁtness centre membership

agreements include a privacy policy as part of

the agreement. The policy requires consumers to

agree to the personal information they provided

to the health and ﬁtness centre being used for a

range of purposes, including direct marketing.

This direct marketing may be conducted by the

centre itself, but some contracts reviewed by CAV

allowed the direct marketing to be conducted by

third parties. Some membership agreements do

not enable consumers to opt out of having their

personal information used for direct marketing

purposes. Consumer Affairs Victoria considers that

this may be unfair.

CAV recommends an ‘opt out’ box on

membership application forms so consumers can

elect not to have their personal information used

for direct marketing purposes. This will not restrict

the centre from contacting the consumer with

important information about their membership

and the centre.

Use of consumers’ images

A number of membership agreements reviewed

by CAV required consumers to consent to having

their photographs taken while using the health

and ﬁtness centre facilities. They were also

required to consent to having those images used

in the centre’s promotional material. For example:

By signing this agreement, I consent to the Company

using my image in any promotional or other material

in the course of business. Members will be informed

of media presence or photographic sessions through

general notiﬁcation as soon as is practical.

By signing this Application and Agreement you

consent to us using your image in any promotion or

other material in relation to the business.

CAV considers a term setting out consent

in advance is unfair and such clauses should

be completely removed from membership

agreements. Individual speciﬁc consents should

always be obtained.

If visual recordings of any member are to be made

on the premises, the centre should:

• alert members before they enter the centre

that recording devices are present

• advise the member how the images will

be used

• obtain written consent from the member

prior to recording.

Fair Trading

A guide for the health

and ﬁtness industry

Many health and ﬁtness centres collect

membership fees by direct debit. Some health

and ﬁtness centres manage these debits but

others contract the work to a third party, typically

a dedicated billing services company.

Consumers complete a Direct Debit Request

(DDR). The DDR authorises and requests a

consumer’s ﬁnancial institution to debit the

fees and contains the terms of the debit

arrangement such as the amount and frequency

of the direct debits.

There are also terms that set out the basis on

which the health and ﬁtness centre (or the billing

services company) provides the direct debit

service to the consumer. These are known as the

Direct Debit Request Service Agreement (DRS).

Where the health and ﬁtness centre arranges the

debit, the DDR and DRS are typically contained

within the centre’s general application form and

membership agreement. When a centre engages

a dedicated billing services company to conduct

the direct debiting, the DDR and DRS is typically a

separate form to be completed by the consumer.

Health and ﬁtness centres that engage a billing

services company to conduct the direct debiting

should ensure that the arrangement does not

constitute ‘third line forcing’. This occurs when

goods or services are supplied on the condition

that the purchaser acquires other goods or

services from a particular third party, or when

there is a refusal to supply because the purchaser

will not agree to that condition. ‘Third line

forcing’ is prohibited under the provisions of

the ACL regarding ‘exclusive dealing’. Health

and ﬁtness centres are encouraged to seek

independent legal advice on this issue.

Both the DDR and DRS must comply with unfair

contract term legislation.

Note: This chapter only covers issues speciﬁc to

DDR and DRS identiﬁed in CAV’s review. Other

relevant issues are discussed throughout this

guide. These chapters should also be read and

applied in drafting the DDR and DDS.

Direct debit transactions are managed through

a system called the Bulk Electronic Clearing

System (BECS). The Australian Payments Clearing

Association Ltd (APCA) coordinates, manages

and ensures the effective implementation and

operation of this system. APCA has published

Procedures for the Bulk Electronic Clearing System.

This document, which can be downloaded from

www.apca.com.au, includes speciﬁc requirements

for the DDR and DRS. Relevant requirements are

discussed below. Health and ﬁtness centres and

billing services companies drawing up a DDR and

DRS are encouraged to familiarise themselves with

the procedures and to seek legal advice.

Relationship between

the health and ﬁtness

centre, the billing services

provider and the consumer

The relationship between the health and ﬁtness

centre, the billing services company and the

consumer should be clearly spelled out in the

agreement/s. This should include an explanation

of how the arrangement works in practice.

The agreements should clearly outline which

problems should be addressed to the health and

ﬁtness centre, and those that should be taken up

with the billing services company.

Direct debiting of

membership fees

The name of the billing services provider and its

contact details should be stated, as sometimes

the name of the billing services provider rather

than the health and ﬁtness centre appears on the

consumer’s ﬁnancial statements.

In the Langley and Matrix (No.2) case, the

following term was found to be unfair because

among other reasons it purported “to allow

a third party to the agreement who is not

identiﬁed in the agreement, and whose rights and

obligations visàvis the consumer are not identiﬁed

in the agreement, to terminate the agreement…

thereby creating a signiﬁcant imbalance in the

parties’ rights and obligations arising under the

membership agreement, to the detriment of the

consumer” (Declaration paragraph 8(a)).

In the event that you do not pay the amount payable

under this Agreement within 31 calendar days of the

due date expressed on the Agreement, the Club and

the Billing Agent may at their discretion terminate

the Membership and this Agreement.

(Declaration paragraph 8)

This was also thought to create uncertainty,

confusion or doubt for the consumer and was

thereby declared to be not clearly expressed.

Judge Harbison stated: “A business may quite

properly wish to nominate a third party as agent

to perform some part of that business’ obligations

or to enforce its rights under a contract. However

if it chooses to do so, the contract must be

written in such a way that the consumer is able

to understand clearly who that third party is,

how they may be contacted, and the rights to be

exercised by that third party under the contract

with the consumer” (Reasons paragraph 3435).

Several membership agreements reviewed by

CAV stipulated that consumers must contact the

health and ﬁtness centre and not their ﬁnancial

institutions with enquiries about direct debits.

For example:

Direct all your enquiries regarding your monthly

deductions to us, rather than to your ﬁnancial

institution…

If you believe that a drawing has been initiated

incorrectly, we encourage you to take the matter up

directly with us by contacting us in writing… Note:

your ﬁnancial institution will ask you to contact us

to resolve your disputed drawing prior to involving

them.

Should you wish to discuss these [direct debit]

arrangements, including any possible disputed

amounts, please call your Club Manager directly

or the Administration ofﬁce on… rather than your

ﬁnancial institution.

This contradicts APCA procedures and the

Australian Bankers’ Association Code of Banking

Practice and is potentially misleading:

• APCA procedures require that a DRS must:

- set out in reasonable detail how a

consumer can dispute a direct debit, stop

a direct debit, and cancel a DDR with the

health and ﬁtness centre/billing services

company, and

- advise the consumer that he/she may

contact his/her own ﬁnancial institution

in these circumstances. (Refer to

Requirements for Direct Debit Request

Service Agreements box – 7.11(e),(f))

• Clause 19.1 of the Code of Banking Practice

states that on the issue of direct debits, banks

“will not direct or suggest that you should

ﬁrst raise any such request or complaint

directly with the debit user”, although they

may suggest that the consumer also contacts

the debit user. (This does not apply to direct

debits on credit cards. To read the Code of

Banking Practice go to www.bankers.asn.au.)

Consumers are entitled to contact their ﬁnancial

institution with direct debit enquiries and should

not be instructed otherwise.

Fair Trading

A guide for the health

and ﬁtness industry

Consistency

The health and ﬁtness centre membership

agreement and the DRS must be consistent. In

its review, CAV discovered an agreement that

contained safeguards for consumers that fees

would not be increased during the minimum

term, while the DRS included a term allowing the

centre to unilaterally vary membership fees at any

time. CAV considered this term unfair.

In the Langley and Matrix (No.2) case, the

membership agreement was found to be not

clearly expressed because the documents when

read together created confusion, uncertainty or

doubt by using terms which were ambiguous

or inconsistent with each other, including the

following terms (emphasis added):

I/We acknowledge that the business is to provide 14

days notice if proposing to vary the terms of the debit

arrangements.

We reserve the right, at any time after the minimum

term on a contract, to increase the fees to be

charged, and will give written notice, to the most

current address you have provided, at least one

month prior to this occurring.

(Declaration paragraph 9(b))

APCA procedures require at least 14 days’ notice

to the consumer of any change to the terms of the

DRS. But to achieve consistency with the health

and ﬁtness agreement, more than 14 days’ notice

may be necessary. This would be the case if the

consumer was required to give 30 days’ notice of

his or her intention to terminate a membership.

The APCA procedures also require that a DRS

set out in reasonable detail the procedure

available to the consumer to request deferment

or alteration of any of the debit arrangements.

(Refer to Requirements for Direct Debit Request

Service Agreements box – 7.11(d)). CAV welcomes

this requirement as the unfairness of a unilateral

variation term may be mitigated by giving the

consumer reciprocal unilateral variation rights.

DDR to cover membership

fees only

The DDR and DRS should be restricted to the

debiting of speciﬁed membership fees at speciﬁed

times. There should be no blanket terms allowing

the debiting of unspeciﬁed amounts, particularly

in the event of default. In the Langley and Matrix

(No.1) case, the following term was found to

be unfair because, among other reasons, where

the payment (or obligation to make it) was

bona ﬁde in dispute, it enabled the centre to

recover payment without notice to the consumer,

preventing the consumer from raising the dispute

with the centre or from stopping the payment

being debited from his/her account. It was also

found to be unfair because in this scenario the

centre could debit for more than the ‘payment

due’ (Orders paragraph 4(b)).

If any payment due to X under my membership

agreement is not made on the due date from my

nominated bank account, my signature below and

initials here _______ will constitute my unconditional

and irrevocable authority for X to, without notice,

debit my nominated bank account/credit card for the

total amount due.

(Orders paragraph 4)

Another example is the following term, which

Consumer Affairs Victoria considers unfair.

CAV considers that speciﬁc consent should be

sought for any amounts other than the regular

membership fees to be direct debited.

I request and authorize X to arrange, through its

nominated billing agent, for any amount X may

debit or charge through the Bulk Electronic Clearing

System from an account held at the ﬁnancial

institution identiﬁed in the DDR agreement and paid

to X, subject to the terms and conditions of the DDR

Service Agreement.

Cancellation and

direct debiting

Single written notice only

Written notiﬁcation to the health and ﬁtness

centre of a consumer’s intention to cancel should

terminate both the membership agreement and

the DDR/DRS. Cancellation terms in membership

agreements are often unclear as to whether

terminating the membership agreement also

terminates the DDR/DRS.

CAV considers that because a business ﬁnds

it useful or necessary to split off the DRS

into a separate form, this should not make it

more difﬁcult for the consumer to cancel his or

her membership.

Cancellation of DDR/DRS only

APCA’s procedures require that the DRS set out

in reasonable detail the procedure available

to the consumer to cancel a DDR/DRS. (Refer

to Requirements for Direct Debit Request Service

Agreements box– 7.11(e)). Clause 19 of the Code

of Banking Practice

requires banks to honour

requests from consumers to cancel a DDR/DRS

(although this does not cover DDR/DRSs on

credit cards or accounts at nonbank ﬁnancial

institutions). However, cancelling a DDR/DRS

does not necessarily cancel the consumer’s health

and ﬁtness centre membership agreement. This

complex situation creates practical confusion for

both consumers and traders. CAV welcomes any

attempt in the documents to explain the situation

and consumers’ rights. An example of this follows.

Cancellation of the authority to debit your account

will not terminate this contract or remove your

liability to make the payments you have agreed to.

7 Australian Bankers’ Association Inc’s Code of Banking Practice (May

2004). Clause 19, page 9.

Advance notice

Typically, consumers are required to give

advance notice of their desire to terminate their

memberships (this is usually 30 days). CAV does

not consider the requirement to give advance

notice to be unreasonable. However, some

terms concerning advance notice for consumers

paying by direct debit in contracts reviewed by

Consumer Affairs Victoria were considered unfair

and potentially misleading.

Some membership agreements stated that a

consumer’s membership cancellation would be

effective from the ﬁrst direct debit date after

the 30day notice period. An example is outlined

in the diagram below. The last direct debit

would occur on 1 March and the consumer’s

cancellation would not become effective until

1 April, resulting in a notice period that was

signiﬁcantly longer than 30 days. CAV considers

this unfair.

CAV considers that where consumers are required

to give 30 days’ advance notice of their intention

to cancel their memberships, the direct debit date

that falls within those 30 days should be the last

direct debit. In the example below, the last direct

debit would take place on 1 February. The direct

debit amount needs to be reduced to reﬂect only

a further 15 days’ membership. If the adjustment

cannot be processed in time, the remainder

should be refunded to the consumer.

In the Langley and Matrix (No.2) case, Judge

Harbison found the following term unfair

because when the consumer gave written

notice of termination after the minimum term

expired, there was no provision in the relevant

membership agreement for a refund of the

consumer’s fees, paid in advance, where the

termination occurred before the end of the month

(Declaration paragraph 5(b)).

You can terminate your membership after

the minimum term by giving us 30 days notice

in writing.

(Declaration paragraph 5(ii))

Fair Trading

A guide for the health

and ﬁtness industry

Payment default

The payment issues discussed in Chapter 2 apply

equally to DRSs. CAV is particularly concerned

about terms in DDR or DRS that allow unspeciﬁed

amounts to be deducted in the event of default.

CAV considers this to be penalising the consumer

for breach of contract. This is unfair. For example:

If any payment due to X under my membership

agreement is not made on the due date from my

nominated bank account, my signature below will

constitute my unconditional and irrevocable authority

for X without notice to debit my nominated credit

card, details which are set out below, with the total

amount due.

CAV welcomes the APCA procedures that require

the DRS to state what happens when direct

debits are returned unpaid by the consumer’s

ﬁnancial institution. This includes a clear

statement of any related fees that will be applied

by the health and ﬁtness centre or billing services

company. (Refer to Requirements for Direct Debit

Request Service Agreements box – 7.11(j)). CAV

considers that these fees should be speciﬁed

and reﬂect the actual cost to the health and

ﬁtness centre and/or billing service company of

the direct debit being returned unpaid. If they

do not reﬂect the actual costs, the term may be

considered penal and unfair.

Requirements for Direct

Debit Request Service

Agreements

Section 7.11 of the Australian Payments Clearing

Association Ltd’s Procedures for the Bulk Electronic

Clearing System states that each DDR Service

Agreement must, amongst other things:

• set out reasonable details (or, if such details

are contained in the DDR refer the customer

to it) of the terms of the debit arrangements

to apply between the health and ﬁtness

centre/billing services company and the

customer, including if applicable, the basis

on which the health and ﬁtness centre/billing

services company will issue billing advices to

the customer (7.11(b))

• provide for not less than 14 days’ notice to

the customer if the health and ﬁtness centre/

billing services company proposes to vary

any of the terms of those debit arrangements

(7.11(c))

• set out in reasonable detail the procedure

available to the customer to request

deferment of, or alteration to, any of those

arrangements (7.11(d))

Correct application of a 30 day notice period for membership cancellation

15 January

Consumer requests cancellation

(in writing)

14 February

Cancellation effective*

30 days notice

Fees direct debited in advance Fees direct debited in advance

- adjust if possible*

Next direct debit date

* Refund required if adjustment not made

1 January 1 February 1 March

• set out in reasonable detail the procedure

available to the customer to stop any direct

debit or cancel a DDR with the health and

ﬁtness centre/billing services company, and

advise the customer that all requests for

such stops or cancellations may be directed

to the health and ﬁtness centre/billing

services company or the customer’s ﬁnancial

institution (7.11(e))

• set out in reasonable detail the procedure

available to the customer to dispute any direct

debit with the health and ﬁtness centre/billing

services company and the dispute resolution

process to apply, and advise the customer

that claims may also be directed to his/her

ﬁnancial institution (7.11(f))

• state its policy when direct debits are returned

unpaid by the customer’s ﬁnancial institution,

including the application by the health and

ﬁtness centre/billing services company of any

related fees (7.11(j)).

Refer to www.apca.com.au for full details.

Fair Trading

A guide for the health

and ﬁtness industry

Section 23 Unfair terms of

consumer contracts

(1) A term of a consumer contract is void if:

(a) the term is unfair; and

(b) the contract is a standard form contract.

(2) The contract continues to bind the parties

if it is capable of operating without the

unfair term.

(3) A consumer contract is a contract for:

(a) a supply of goods or services; or

(b) a sale or grant of an interest in land;

to an individual whose acquisition of the

goods, services or interest is wholly or

predominantly for personal, domestic or

household use or consumption.

Section 24 Meaning

of unfair

(1) A term of a consumer contract is unfair if:

(a) it would cause a signiﬁcant imbalance in

the parties’ rights and obligations arising

under the contract; and

(b) it is not reasonably necessary in order

to protect the legitimate interests of the

party who would be advantaged by the

term; and

ﬁnancial or otherwise) to a party if it were

to be applied or relied on.

(2) In determining whether a term of a consumer

contract is unfair under subsection (1), a

court may take into account such matters as

it thinks relevant, but must take into account

the following:

(a) the extent to which the term is

transparent;

(b) the contract as a whole.

(3) A term is transparent if the term is:

(a) expressed in reasonably plain

language; and

(b) legible; and

(d) readily available to any party affected

by the term.

(4) For the purposes of subsection (1)(b), a term

of a consumer contract is presumed not to be

reasonably necessary in order to protect the

legitimate interests of the party who would

be advantaged by the term, unless that party

proves otherwise.

Australian Consumer

Law unfair contract

term legislation

Section 25 Examples of

unfair terms

(1) Without limiting section 24, the following are

examples of the kinds of terms of a consumer

contract that may be unfair:

(a) a term that permits, or has the effect of

permitting, one party (but not another

party) to avoid or limit performance of

the contract;

(b) a term that permits, or has the effect of

permitting, one party (but not another

party) to terminate the contract;

penalising, one party (but not another

party) for a breach or termination of

the contract;

(d) a term that permits, or has the effect of

permitting, one party (but not another

party) to vary the terms of the contract;

(e) a term that permits, or has the effect of

permitting, one party (but not another

party) to renew or not renew the contract;

(f) a term that permits, or has the effect of

permitting, one party to vary the upfront

price payable under the contract without

the right of another party to terminate

the contract;

(g) a term that permits, or has the effect of

permitting, one party unilaterally to vary

the characteristics of the goods or services

to be supplied, or the interest in land to

be sold or granted, under the contract;

(h) a term that permits, or has the effect

of permitting, one party unilaterally to

determine whether the contract has been

breached or to interpret its meaning;

(i) a term that limits, or has the effect of

limiting, one party’s vicarious liability for

its agents;

(j) a term that permits, or has the effect

of permitting, one party to assign the

contract to the detriment of another party

without that other party’s consent;

(k) a term that limits, or has the effect

of limiting, one party’s right to sue

another party;

(l) a term that limits, or has the effect

of limiting, the evidence one party

can adduce in proceedings relating to

the contract;

(m) a term that imposes, or has the effect

of imposing, the evidential burden

on one party in proceedings relating to

the contract;

(n) a term of a kind, or a term that has

an effect of a kind, prescribed by

the regulations.

(2) Before the Governor-General makes a

regulation for the purposes of subsection (1)

(n) prescribing a kind of term, or a kind of

effect that a term has, the Minister must take

into consideration:

(a) the detriment that a term of that kind

would cause to consumers; and

(b) the impact on business generally

of prescribing that kind of term or

effect; and

Fair Trading

A guide for the health

and ﬁtness industry

Section 26 Terms that

deﬁne main subject matter

of consumer contracts etc.

are unaffected

(1) Section 23 does not apply to a term of a

consumer contract to the extent, but only to

the extent, that the term:

(a) deﬁnes the main subject matter of the

contract; or

(b) sets the upfront price payable under the

contract; or

by a law of the Commonwealth, a State or

a Territory.

(2) The upfront price payable under a consumer

contract is the consideration that:

(a) is provided, or is to be provided, for

the supply, sale or grant under the

contract; and

(b) is disclosed at or before the time the

contract is entered into;

but does not include any other consideration

that is contingent on the occurrence or non-

occurrence of a particular event.

Section 27 Standard

form contracts

(1) If a party to a proceeding alleges that a

contract is a standard form contract, it is

presumed to be a standard form contract

unless another party to the proceeding

proves otherwise.

(2) In determining whether a contract is a

standard form contract, a court may take into

account such matters as it thinks relevant, but

must take into account the following:

(a) whether one of the parties has all or

most of the bargaining power relating to

the transaction;

(b) whether the contract was prepared

by one party before any discussion

relating to the transaction occurred

between the parties;

required either to accept or reject the

terms of the contract (other than the

terms referred to in section 26(1)) in the

form in which they were presented;

(d) whether another party was given an

effective opportunity to negotiate the

terms of the contract that were not the

terms referred to in section 26(1);

(e) whether the terms of the contract (other

than the terms referred to in section

26(1)) take into account the speciﬁc

characteristics of another party or the

particular transaction;

(f) any other matter prescribed by

the regulations.

Section 28 Contracts

to which this Part does

not apply

(1) This Part does not apply to:

(a) a contract of marine salvage or towage; or

(b) a charterparty of a ship; or

by ship.

(2) Without limiting subsection (1)(c), the

reference in that subsection to a contract

for the carriage of goods by ship includes a

reference to any contract covered by a sea

carriage document within the meaning of the

amended Hague Rules referred to in section

7(1) of the Carriage of Goods by Sea Act 1991.

(3) This Part does not apply to a contract that

is the constitution (within the meaning of

section 9 of the Corporations Act 2001) of a

company, managed investment scheme or

other kind of body.

DOT5504/10

consumer.vic.gov.au

1300 55 81 81

consumer@justice.vic.gov.au

Victorian Consumer & Business Centre

113 Exhibition Street

Melbourne 3000

Services from Consumer Affairs Victoria are also available

at Justice Service Centres in Ballarat, Bendigo, Berwick,

Box Hill, Broadmeadows, Geelong, Mildura, Morwell,

Wangaratta and Warrnambool. Our mobile service

regularly visits rural communities.

January 2011

TIS Telephone Interpreting Service 131 450

TTY Textphone or modem users only, ring the

NRS on 133 677, then quote 1300 55 81 81

Callers who use Speech to Speech Relay dial

1300 555 727, then quote 1300 55 81 81