SECTIONS 1812.80-1812.98 - California Statutes

CIVIL CODE

SECTION 1812.80-1812.98

1812.80. (a) The Legislature finds that the health studio industry
has a significant impact upon the economy and well-being of this
state and its local communities; and that the provisions of this
title relating to contracts for health studio services are necessary
for the public welfare.
(b) The Legislature declares that the purpose of this title is to
safeguard the public against fraud, deceit, imposition and financial
hardship, and to foster and encourage competition, fair dealing, and
prosperity in the field of health studio services by prohibiting or
restricting false or misleading advertising, onerous contract terms,
harmful financial practices, and other unfair, dishonest, deceptive,
destructive, unscrupulous, fraudulent, and discriminatory practices
by which the public has been injured in connection with contracts for
health studio services.

1812.81. As used in this title, "contract for health studio
services" means a contract for instruction, training or assistance in
physical culture, body building, exercising, reducing, figure
development, or any other such physical skill, or for the use by an
individual patron of the facilities of a health studio, gymnasium or
other facility used for any of the above purposes, or for membership
in any group, club, association or organization formed for any of the
above purposes; but does not include (a) contracts for professional
services rendered or furnished by a person licensed under the
provisions of Division 2 (commencing with Section 500) of the
Business and Professions Code, (b) contracts for instruction at
schools operating pursuant to the provisions of the Education Code,
or (c) contracts for instruction, training, or assistance relating to
diet or control of eating habits not involving physical culture,
body building, exercising, figure development, or any other such
physical skill.

1812.82. Every contract for health studio services shall be in
writing and shall be subject to the provisions of this title. A copy
of the written contract shall be given to the customer at the time he
signs the contract.

1812.83. All contracts for health studio services, which may be in
effect between the same seller and the same buyer, the terms of which
overlap for any period, shall be considered as one contract for the
purposes of this title.

1812.84. (a) A contract for health studio services may not require
payments or financing by the buyer to exceed the term of the
contract, nor may the term of the contract exceed three years. This
subdivision does not apply to a member's obligation to pay valid,
outstanding moneys due under the contract, including moneys to be
paid pursuant to a termination notice period in the contract in which
the termination notice period does not exceed 30 days.
(b) A contract for health studio services shall include a
statement printed in a size at least 14-point type that discloses the
length of the term of the contract. This statement shall be placed
above the space reserved for the signature of the buyer.

1812.85. (a) Every contract for health studio services shall
provide that performance of the agreed-upon services will begin
within six months after the date the contract is entered into. The
consumer may cancel the contract and receive a pro rata refund if the
health studio fails to provide the specific facilities advertised or
offered in writing by the time indicated. If no time is indicated in
the contract, the consumer may cancel the contract within six months
after the execution of the contract and shall receive a pro rata
refund. If a health studio fails to meet a timeline set forth in this
section, the consumer may cancel the contract at any time after the
expiration of the timeline. However, if following the expiration of
the timeline, the health studio provides the advertised or
agreed-upon services, the consumer may cancel the contract up to 10
days after those services are provided.
(b) (1) Every contract for health studio services shall, in
addition, contain on its face, and in close proximity to the space
reserved for the signature of the buyer, a conspicuous statement in a
size equal to at least 10-point boldface type, as follows:

"You, the buyer, may cancel this agreement at any time prior to
midnight of the fifth business day of the health studio after the
date of this agreement, excluding Sundays and holidays. To cancel
this agreement, mail or deliver a signed and dated notice, or send a
telegram which states that you, the buyer, are canceling this
agreement, or words of similar effect. The notice shall be sent to,

__________________________________________________
(Name of health studio operator)
at________________________________________________
(Address of health studio operator)."

(2) The contract for health studio services shall contain on the
first page, in a type size no smaller than that generally used in the
body of the document, the following: (A) the name and address of the
health studio operator to which the notice of cancellation is to be
mailed, and (B) the date the buyer signed the contract.
(3) The contract shall provide a description of the services,
facilities, and hours of access to which the consumer is entitled.
Any services, facilities, and hours of access that are not described
in the contract shall be considered optional services, and these
optional services shall be considered as separate contracts for the
purposes of this title and Section 1812.83.
(4) Until the health studio operator has complied with this
section, the buyer may cancel the contract for health studio
services.
(5) All moneys paid pursuant to a contract for health studio
services shall be refunded within 10 days after receipt of the notice
of cancellation, except that payment shall be made for any health
studio services received prior to cancellation.
(c) If at any time during the term of the contract, including a
transfer of the contractual obligation, the health studio eliminates
or substantially reduces the scope of the facilities, such as
swimming pools or tennis courts, that were described in the contract,
in an advertisement relating to the specific location, or in a
written offer, and available to the consumer upon execution of the
contract, the consumer may cancel the contract and receive a pro rata
refund. The consumer may not cancel the contract pursuant to this
subdivision if the health studio, after giving reasonable notice to
its members, temporarily takes facilities out of operation for
reasonable repairs, modifications, substitutions, or improvements.
This subdivision shall not be interpreted to give the consumer the
right to cancel a contract because of changes to the type or quantity
of classes or equipment offered, provided the consumer is informed
in the contract that the health studio reserves the right to make
changes to the type or quantity of classes or equipment offered and
the changes to the type or quantity of classes or equipment offered
are reasonable under the circumstances.
(d) (1) If a contract for health studio services requires payment
of one thousand five hundred dollars ($1,500) to two thousand dollars
($2,000), inclusive, including initiation fees or initial membership
fees, by the person receiving the services or the use of the
facility, the person shall have the right to cancel the contract
within 20 days after the contract is executed.
(2) If a contract for health studio services requires payment of
two thousand one dollars ($2,001) to two thousand five hundred
dollars ($2,500), inclusive, including initiation fees or initial
membership fees, by the person receiving the services or the use of
the facility, the person shall have the right to cancel the contract
within 30 days after the contract is executed.
(3) If a contract for health studio services requires payment of
two thousand five hundred one dollars ($2,501) or more, including
initiation fees or initial membership fees, by the person receiving
the services or the use of the facility, the person shall have the
right to cancel the contract within 45 days after the contract is
executed.
(4) The right of cancellation provided in this subdivision shall
be set out in the membership contract.
(5) The rights and remedies under this paragraph are cumulative to
any rights and remedies under other law.
(6) A health studio entering into a contract for health studio
services that requires a payment of less than one thousand five
hundred dollars ($1,500), including initiation or initial membership
fees and exclusive of interest or finance charges, by the person
receiving the services or the use of the facilities, is not required
to comply with paragraph (1), (2), or (3).
(e) Upon cancellation, the consumer shall be liable only for that
portion of the total contract payment, including initiation fees and
other charges however denominated, that has been available for use by
the consumer, based upon a pro rata calculation over the term of the
contract. The remaining portion of the contract payment shall be
returned to the consumer by the health studio.

1812.86. (a) No contract for health studio services shall require
payment by the person receiving the services or the use of the
facilities of a total amount in excess of the amount specified in
subdivision (b) or (c).
(b) The limit specified in subdivision (a) shall, on and after
January 1, 2006, be three thousand dollars ($3,000), inclusive of
initiation or initial membership fees and exclusive of interest or
finance charges.
(c) The limit in subdivision (a) shall, on and after January 1,
2010, be four thousand four hundred dollars ($4,400), inclusive of
initiation or initial membership fees and exclusive of interest or
finance charges.

1812.87. No contract for health studio services shall require or
entail the execution of any note or series of notes by the buyer
which when separately negotiated will cut off as to third parties any
right of action or defense which the buyer may have against the
seller.

1812.88. No right of action or defense arising out of a contract
for health studio services which the buyer has against the seller,
and which would be cut off by assignment, shall be cut off by
assignment of the contract to any third party whether or not he
acquires the contract in good faith and for value unless the assignee
gives notice of the assignment to the buyer as provided in this
section and within 30 days of the mailing of notice receives no
written notice of the facts giving rise to the claim or defense of
the buyer. A notice of assignment shall be in writing addressed to
the buyer at the address shown on the contract and shall identify the
contract and inform the buyer that he must, within 30 days of the
date of mailing of the notice, notify the assignee in writing of any
facts giving rise to a claim or defense which he may have. The notice
of assignment shall state the name of the seller and buyer, a
description of the services, the contract balance and the number and
amount of the installments.

1812.89. (a) (1) Every contract for health studio services shall
contain a clause providing that if, by reason of death or disability,
the person agreeing to receive services is unable to receive all
services for which he has contracted, he and his estate shall be
relieved from the obligation of making payment for services other
than those received prior to death or the onset of disability, and
that if he has prepaid any sum for services, so much of such sum as
is allocable to services he has not taken shall be promptly refunded
to him or his representative.
(2) In every case in which a person has prepaid a sum for services
under a contract for health studio services, and by reason of death
or disability, is unable to receive all such services, the party
agreeing to furnish such services shall, on request, immediately
refund to such person or his personal representative such amount of
the sum prepaid as is proportionate to the amount of services not
received.
(3) For the purposes of this section, "disability" means a
condition which precludes the buyer from physically using the
facilities and the condition is verified by a physician.
(4) Notwithstanding the provisions of any contract to the
contrary, whenever the contract price is payable in installments and
the buyer is relieved from making further payments or entitled to a
refund under this section, the amount of the contract price allocable
to services not received shall represent at least as great a
proportion of the total contract price as the sum of the periodic
monthly balances not yet due bears to the sum of all the periodic
monthly balances under the schedule of installments in the contract.
(b) (1) Except as provided in paragraph (2), every contract for
health studio services shall contain a clause providing that if the
person agreeing to receive health studio services moves further than
25 miles from the health studio and is unable to transfer the
contract to a comparable facility, such person shall be relieved from
the obligation of making payment for services other than those
received prior to the move, and if such person has prepaid any sum
for health studio services, so much of such sum as is allocable to
services he or she has not taken shall be promptly refunded.
(2) Notwithstanding paragraph (1), a contract for health studio
services may contain a clause providing that if the person agreeing
to receive health studio services moves further than 25 miles from
the health studio and is unable to transfer the contract to a
comparable facility, such person may be charged a predetermined fee
not exceeding one hundred dollars ($100), or, if more than half the
life of the contract has expired, such person may be charged a
predetermined fee not exceeding fifty dollars ($50).

1812.90. The provisions of this title are not exclusive and do not
relieve the parties or the contracts subject thereto from compliance
with all other applicable provisions of law.

1812.91. Any contract for health studio services which does not
comply with the applicable provisions of this title shall be void and
unenforceable as contrary to public policy.

1812.92. Any contract for health studio services entered into in
reliance upon any willful and false, fraudulent, or misleading
information, representation, notice or advertisement of the seller
shall be void and unenforceable.

1812.93. Any waiver of the buyer of the provisions of this title
shall be deemed contrary to public policy and shall be void and
unenforceable.

1812.94. (a) Any buyer injured by a violation of this title may
bring an action for the recovery of damages. Judgment may be entered
for three times the amount at which the actual damages are assessed
plus reasonable attorney fees.
(b) Notwithstanding the provisions of this title, any failure to
comply with any provision of this title may be corrected within 30
days after the execution of the contract by the buyer, and, if so
corrected, neither the seller nor the holder shall be subject to any
penalty under this title, provided that any correction which
increases any monthly payment, the number of payments, or the total
amount due, must be concurred in, in writing, by the buyer. "Holder"
includes the seller who acquires the contract or, if the contract is
purchased by a financing agency or other assignee, the financing
agency or other assignee.

1812.95. If any provision of this title or the application thereof
to any person or circumstances is held unconstitutional, the
remainder of the title and the application of such provision to other
persons and circumstances shall not be affected thereby.

1812.96. (a) Except as provided in subdivision (c) or (d), all
money received by the seller of health studio services from a
consumer for a health studio facility that has not yet opened for
business shall be held in trust and shall be deposited in a trust
account established in a state or federally chartered bank or savings
association. The seller shall not draw, transfer, or encumber any of
the money held in trust until five business days after the health
studio facility has opened and the seller has fully paid refunds to
consumers who canceled their contracts as provided in subdivision (b)
or in Section 1812.85.
(b) In addition to any other cancellation rights, a consumer who
pays any money under a contract for health studio services for a
health studio facility that has not yet opened for business has the
right to cancel the contract and receive a full refund at any time
prior to midnight of the fifth business day after the date the health
studio opens for business. The cancellation right shall be set forth
in the contract. The refund shall be paid within 10 days of receipt
of notice of cancellation.
(c) Notwithstanding subdivision (a), a seller of health studio
services may draw on money held in trust to pay refunds or may draw,
transfer, or encumber funds to the extent that the amount is offset
by a bond of equal or greater amount that satisfies this subdivision.
The bond shall be issued by a surety insurer admitted to do business
in this state and shall be filed with the Secretary of State. The
bond shall be in favor of the State of California for the benefit of
consumers harmed by a violation of this title.
(d) Subdivision (a) does not apply to a seller of health studio
services that is, at the time money is received from the consumer,
operating at least five health studio facilities in this state that
have been in operation for a period of at least five years, and that
has an excess of current assets over current liabilities of at least
one million dollars ($1,000,000).

1812.98. Nothing in this title is intended to prohibit
month-to-month contracts. This section is declaratory of existing
law.