OVERVIEW OF CALIFORNIA’S MARTIAL ARTS SCHOOL CONTRACT LAW
Before talking about martial arts school contracts, and California’s Health Studio Services Contract Law, I want you to know something.
My name is Frank Bloksberg. I am Chief Instructor of Aikido’Ka. I am also a lawyer. Nothing I say here is legal advice, just general rules.
If you want legal advice, go hire a lawyer! You can contact me, if you’d like. But I do charge for my time. I won’t be giving legal advice in the comments.
The “End Notes” in this article are to California laws which together are known as California’s Health Studio Services Contract Law. You can search for those laws and read exactly what the law says. The symbol before the law number — § — means “section.” Two of the symbols — §§ — means “sections.” So, Civil Code §1812.81 means California Civil Code section 1812.81. Civil Code §§ 1812.80-1812.97 means California Civil Code sections 1812.80 through and including 1812.97.
California Law Provides Great Consumer Protection.
These laws exist to protect you.
Let’s put it this way . . . Are you wondering how to get out of your martial arts contract?
In California, this is the law you’ll probably use. And you’ll probably find your answer in this article.
Even so, this article really is just an overview. Some exceptions apply which I am not going to discuss here, because they’re really uncommon.
OK. On with our talk about martial arts contracts. . .
These laws apply to all martial arts schools in California. The dojo cannot get out of these laws. Even if they have you sign a martial arts payment contract saying that you waive the law, the rules still apply.1
All martial arts school contracts must be in writing.
The contract may not require payments and initiation/initial membership fees that total more than $4,400. This amount does not include interest or finance charges.3
The length of the contract may not be more than three years. The contract may not require payments for longer than the term.4
That means that a four-year agreement would be unlawful. A two-year contract requiring payments for longer than two years also would be unlawful. It also means that “lifetime contracts” are now allowed.
The contract must say the length of its term. (The contract term is how long in time the contract is.) The term must be printed in at least 14-point type, above the place for your signature.5
The agreement must include the name and address of the company that provides the martial arts instruction. The martial arts agreement also must say the date that you signed it.6
A copy of the contract must be given to you when you sign it.7
If the martial arts school is not already open when you sign, the contract must state when the dojo will be open and available for you to attend. The dojo must open for use within six months of the date you sign.8
If the martial arts school has not opened within six months, you may cancel at any time. But if the dojo does open after six months, you only have ten days to cancel.9
Your Martial Arts Contract Must Say How Long You Have to Cancel.
The agreement must state your right to cancel within five days. The face of the contract must clearly show the following notice, in at least 10-point bold type, close to the place for your signature:
“You, the buyer, may cancel this agreement at any time prior to the 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 martial arts school operator) at (Address of martial arts school operator).”10
In order to cancel, you must mail or deliver a signed and dated notice, or send a telegram, which tells the martial arts school that you have decided to cancel the contract, or words to that effect. The notice must be mailed to or delivered at the dojo’s address given in the agreement. You probably may cancel by sending an e-mail message, although the law does not say anything about that. When you cancel, the dojo operator must refund all payments you made within 10 days after the dojo receives your notice of the cancellation. You must pay for any services that you received prior to your martial arts contract cancellation.11
For example:
You may cancel the martial arts contract at any time before midnight of the fifth day that the martial arts school is open for business after the date you sign.
Don’t count Sundays and holidays when counting the five days.
For instance, if you sign the agreement on Monday, you must cancel it by mailing or delivering notice to the address specified in the contract anytime until midnight on Saturday.
If the dojo were not open for business on Tuesday, the time for canceling would be extended until midnight on Monday. If you signed on Saturday, you don’t count Sunday (even if the martial arts school were open Sunday), meaning that you could cancel by mailing or delivering notice anytime before midnight on Friday.
You have additional time to cancel depending on how much money you have to pay:
If the total value of the contract is between $1,500 and $2,000, you have 20 days to cancel.12
If the total amount of money due is between $2,001 and $2,500, you have 30 days to cancel.13
If the total amount is equal to or greater than $2,501, you have 45 days to cancel.14
The agreement must say what facilities and services you can use and receive. It must say at what days and hours you may use the dojo. Any facilities, services or times of access that are not described in the agreement are optional services and are considered to be separate agreements.15
If the facilities or services at the dojo are eliminated or substantially reduced for more than a temporary time due to reasonable repairs or improvements, you can cancel at any time. It’s hard to know exactly what this means for a dojo when it comes to facilities. For a health club, if they eliminated a pool or tennis courts, that would probably count. Whatever the facility changes are, they must be substantial. Of course, if the martial arts school dropped a substantial number of classes, then you could cancel the dojo agreement.
But if the dojo told you in the contract that the equipment or classes could be changed then you do not have the right to cancel.16
You Can Cancel Your Martial Arts School Contract if You Move or Can’t Train.
The agreement must allow you or your estate to cancel if you become disabled or die,17 and also if you move more than 25 miles from the dojo.18
You may cancel for either of these reasons at any time. For you to cancel because of disability, the disability must make it so that you cannot train. A physician must verify the condition.19
In the event of your death, your representative may cancel. When the agreement is cancelled for either reason, you do not have to pay anymore. The martial arts school must refund the prorated portion of any money you prepaid. You or your representative must request the refund.20
You also may cancel if you move more than 25 miles from the martial arts school and are unable to transfer the contract to another comparable dojo they own. If you move, you do not owe any money and the martial arts school must refund you the prorated part of any money you prepaid.21
However, a dojo may include in its agreement a clause that allows it to charge, or to withhold from the refund, a cancellation fee of not more than $100 (or $50 if more than half the
contract life has expired).22
If a martial arts contract does not comply with these laws, it is void and unenforceable. You could cancel for that reason.23
You Can Cancel Your Martial Arts Contract if the School Commits a Serious Violation of the Law, Including Misleading You.
If the martial arts school commits a significant violation of the law, you can cancel at any time. You should promptly notify the martial arts school when you realize your right to cancel. Be sure to give the martial arts school written notice of your decision to cancel.24
A martial arts agreement also is void and unenforceable, and may be canceled by you, if you sign because of any willfully false or misleading information, representation or advertising by the martial arts school.25
For instance, if the martial arts academy knows or has reason to believe that a significant portion of the services or facilities will not be provided or available for you to use as promised, or if the martial arts school misrepresents anything else that is important to you, that may entitle you to cancel. If you decide to cancel because of the martial arts schools misconduct, you should give written notice of cancellation promptly after you learn of your right to cancel. The notice should describe the willfully false or misleading information.
If you are injured by the martial arts schools failure to comply with the Health Studio Services Contract Law, you may sue the martial arts school to recover three times the amount of any resulting damages, plus reasonable attorney’s fees.26
However, any failure by a martial arts school to comply with these laws can be corrected by them, without penalty, within 30 days after you sign. The correction cannot raise your dues, unless you agree in writing to the increase.27
Watch Out for Financing Agencies and Factoring!
If the martial arts school sells (or assigns) your contract to a third party such as a financing agency or factor, this would generally not affect any contract claim or defense that you have against the martial arts school.28
You need to learn how factoring and selling martial arts contracts can affect you, before you sign anything! This is really important.
For example, if you have canceled, or if the contract is void because the health club gave you false or misleading information, you can assert that defense against a third party trying to enforce the agreement. However, the third party may cut off your claims and defenses by giving you 30 days notice.29
This law does not relieve the health club of the duty to comply with other laws that may apply. An example would be the Unruh Retail Installment Sales Act, if you are making installment payments.30
Any claim that you waived any rights provided by this law is void and unenforceable.31 That means that the requirements of these laws always apply.
Don’t Sign Anything Without Reading it Thoroughly and Understanding It!
If you can’t understand what you’re reading, don’t be pressured into signing. Say no until you understand it. Have someone you trust — preferably your lawyer — explain to you what it means.
ENDNOTES
California’s Health Studio Services Contract Law has helped a lot of people get out of bad martial arts school contracts. To keep yourself safe from unfair martial arts contract, read the agreement carefully before signing. It would be a good idea to speak to speak with a lawyer before signing any agreement to make payments for a long time!