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There's a club that sells paid memberships. In the application, it says upfront that the club can cancel memberships at any time, without reason and without giving a refund.

Is this really an enforceable contract? Is it possible it could be unconscionable that one side has essentially 100% power and the other side has no recourse?

SegNerd
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    What does their Articles of Association say? There is usually a defined procedure for terminating membership. – Weather Vane Mar 20 '22 at 17:01
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    My first thought is that if there is no circumstance under which the contract obliges anything of the club, then does it give consideration to the member? – kaya3 Mar 20 '22 at 18:12
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    You should specify what kind of club this is, because health clubs typically are subject to special laws. On the face of it, this is not a legal contract since the club has no obligations. – user6726 Mar 20 '22 at 19:02

2 Answers2

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Two essential elements of a contract are that each part gives something of value (such as money, or whatever the club has to offer), and each part has an obligation (the member must give money and do certain things, the club must allow the member to use the facility). Without these elements there is no contract, meaning that the "member" has no obligation to pay (and the courts will then order the return of the membership payment). If indeed the club can revoke membership at any time and for no cause, there is no contract and no legal justification for the club to keep your money.

The status of social clubs is not entirely clear, and it's not clear whether "membership" is a contractual matter, however an organization like Elks is a corporation, and state laws regulate expulsion of members of a corporation. They will typically require termination that is fair and reasonable and is carried out in good faith, as discussed in this article. In the cited cases where a person was expelled, it was for violation of the rules. It is unlikely that corporate laws of any state allow unilateral expulsion of a member for no cause.

user6726
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  • Both sides have to receive consideration, but the considerations don't have to be equal in value. Would it not fulfil that requirement if OP had access to the club for 3+ days, and only then had the access revoked? – stannius Mar 21 '22 at 22:03
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If the OP is asking about a health club; it's not entirely clear what type of club is meant:

It is not "unconscionable that one side has essentially 100% power." The potential member of the club has 100% power to not sign the contract. The application contract will have stipulations about membership terms and refunds; it's the potential members' responsibility to read and agree before signing. The membership terms of the contract cannot violate state or federal law; if they do, the contract is void.

If the club member has discovered there are no membership refunds after signing, there's no right to cancel contracts in most states, unless in some cases it is for real estate or a mortgage, and then some states have a "cooling off" period where the contract can be cancelled. Where the purchase is $25 or more, federal law allows for the right to cancel for a full refund until midnight of the third business day after the sale, but that "rule applies to sales at the buyer's home or workplace, at facilities rented by the seller on a temporary basis, or at locations otherwise away from the seller's normal retail location." See https://www.findlaw.com/consumer/consumer-transactions/customer-returns-and-refund-laws-by-state.html

In Oregon, if the membership contract is with a gym, fitness facility, tanning salon or health spa, the member has the right to cancel within three days without penalty. Beyond that time frame, the contract is valid, and the business can cancel a membership and not give a refund if the contract terms allow it. See https://www.doj.state.or.us/consumer-protection/sales-scams-fraud/fitness-clubs-health-spas/

BlueDogRanch
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  • The findlaw site linked in the answer says "federal law provides a "Cooling-Off Rule " giving buyers three days to cancel purchases of $25 or more. " The answer should mention this, as it implied that there is no such right. – David Siegel Mar 20 '22 at 17:41
  • True, but that "rule applies to sales at the buyer's home or workplace, at facilities rented by the seller on a temporary basis, or at locations otherwise away from the seller's normal retail location." – BlueDogRanch Mar 20 '22 at 17:57
  • This sounds like a contract of adhesion. – Tom Mar 20 '22 at 18:48
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    This answer seems to be in contradiction with the other one, mostly because it does not consider the 'Each party needs to exchange something of value' requirement that the other answer is based on. Can you explain why you think this is or isn't relevant? – quarague Mar 21 '22 at 10:54
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    "the business can cancel a membership and not give a refund if the contract terms allow it" I could not find any support for this statement in the link. The customer can agree to waive their ability to cancel for a refund, but they also keep the benefits of the contract e.g. access to gym during the term of the contract. A business unilaterally cancelling a contract without cause and without refund, that is, relieving itself of any obligations from the contract yet retaining all financial benefits for itself, is one step from criminal fraud. – xngtng Mar 21 '22 at 15:54
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    "The potential member of the club has 100% power to not sign the contract." - if it was this simple, fraudsters could get a lot of money by advertising for example a gym membership for less than half of market price, a lot of people would sign up quickly, and then the fraudsters would just cancel all their memberships, keeping all the money. You had the power not to sign up, and you should have read the small print where it's stated that they are allowed to do so without refund. – vsz Mar 21 '22 at 16:54
  • @vsz That the contract is valid and enforceable under some circumstances doesn't mean it's valid and enforceable under all circumstances. Certainly if one party to the contract intended to deprive the other party of the entire benefit they knew they intended to get out of the contract, that would invalidate the contract because that is pretty much the definition of bad faith. – David Schwartz Mar 21 '22 at 21:50
  • The analysis seems a bit off here. The right to not sign a contract is pretty rarely a factor in an unconscionability analysis. The offeree is rarely compelled to sign; if he were, we'd be looking at a coercion argument instead. Likewise, the inclusion of a contract term contrary to law is probably not likely to void the entire contract. – bdb484 Mar 22 '22 at 21:33