Bulletproof or Full of Loopholes?

Risk Management: Review your contracts and liability releases and make sure they’re clear, concise and current.

When was the last time you reviewed the documents you require your facility’s clients to sign? I’ll use a personal experience as an example of how important this is.

I started my personal training business in 2003. With 9 years of law practice under my belt at the time, I capably prepared all my contracts, waivers, health history questionnaires and related documents. Bulletproof? Of course. Overkill? Probably. But since most of my clients are lawyers and judges, none of them balked. For years, I simply emailed the forms to prospective clients, who completed them prior to their first session.

I recently dusted off my nearly decade-old paperwork. Reading it was a workout in itself. In the course of an hour, I cut the number of pages in half. Many small details had become inapplicable. For instance, I had shifted my entire business to my home studio, so reference to the “rules of the [third-party] fitness facility” had become unnecessary. Given the reliable and professional clientele I had developed, the $25 penalty for “bounced checks” was insulting. Fax numbers have nearly become obsolete. And did I really need three contact telephone numbers and physician information for every client? I had been reflexively sending out this paperwork, year after year. No one complained, but I think my new paperwork makes a much better first impression.

What kind of impression are your contracts and liability releases making? Are you doing too much or too little?

Trim and Tailor Your Paperwork

Scaling down your paperwork and tailoring it to your business means that members are more apt to read it from top to bottom. The agreement’s “fine print” is important, and people need to understand it. A clear, concise, understandable release and waiver, in a readable font, prominently displayed in the documentation, sends clients and members the message that they are entering into a business arrangement with you as an equal partner, and that they should evaluate their options responsibly.

Agreements between facilities and clients are generally considered “adhesion contracts.” An adhesion contract is a “standard-form contract prepared by one party, to be signed by another party in a weaker position, usually a consumer, who adheres to the contract with little choice about the terms” (Garner 2009). While courts closely scrutinize adhesion contracts if disputes arise, the contracts generally are enforceable unless the court determines that they are unconscionable. An unconscionable contract is considered unfair or oppressive because of procedural abuses when the contract was signed or substantive abuses relating to the terms of the contract, particularly if those terms violate the reasonable expectations of the parties.

Therefore, it is critical that your clients know what they are signing. Two recent court decisions illustrate the importance of these principles.

In Hazelwood v. L.A. Fitness (Calif. Ct. App. 2011), the client injured himself while using a “stretch trainer machine.” He sued the facility for negligence and the machine’s manufacturer for product liability. The facility moved to dismiss based upon the release the client had signed at the time he joined. The release provided that the client “agreed to assume full responsibility for risks of injury”; the client “agreed to hold [the facility] harmless from all liability to [him] on account of injury to [him] or his property, whether caused by the active or passive negligence of [the facility]”; and the client “acknowledged that use of the facility involved risks of injury,” including “injuries arising from use of exercise equipment and machines.”

The client contended that he did not have his glasses with him at the time he signed the agreement, so he had not read the release; that no one at the facility pointed the release out to him when he joined; and that the agreement was unconscionable because the release was too broad.

The court rejected these arguments, and the facility prevailed. The court explained that there was nothing unconscionable about how the contract was executed. In fact, the client had 3 days after signing to cancel it; thus he had ample opportunity to read it with his glasses on. The court reiterated that a client cannot invalidate a contract simply by claiming that he failed to read it.

The court found the release to be “clear, unambiguous, and broad in scope.” As the court explained, “Injury sustained while using the stretch trainer, whether or not [it] was the result of poor maintenance or improper assembly of the equipment, was a risk reasonably related to the use of the exercise facility and the use of the equipment, so it was encompassed in the release.” The court further stated that clients have a wide range of choices in fitness facilities, that they are not required to join a facility and that “many recreational activities available to the public would become too costly if release provisions were not enforced.”

Strong Language, Stronger Protection

Periodic review of paperwork also gives you an opportunity to strengthen language designed to protect your facility. In Mellon v. Crunch Gym, 2011 NY Slip Op. 51289 (Kings County, New York), a loophole in a release made that facility’s protection largely ineffective.

In Mellon, a client sued both the facility and her trainer after she injured herself while performing an exercise under the trainer’s supervision. Her original trainer of 2 years had recently resigned, and in the second session with the new trainer, the client fell while performing plyometrics on a step bench. Among other things, she contended that the new trainer had provided insufficient instruction, pushed her beyond her physical capabilities and spotted her ineffectively. She also asserted claims against the facility for negligent hiring and supervision.

The client had signed a membership agreement and a separate personal trainer agreement, containing both a covenant not to sue and a release from liability arising out of facility use and membership activities. The facility moved to dismiss based upon this documentation.

These documents provided that the facility and its trainers would be held harmless “except if such accident or injury is the result of the negligence of the club, its agents, or its employees.” This exception swung the door wide open for evidence about purported negligence.

At pretrial depositions, the client testified that she had attempted to perform the exercise as instructed, but it was beyond her fitness level and was inherently dangerous. The trainer admitted that he had not reviewed the client’s paperwork or talked with her former trainer prior to working with her, but that he believed the exercise was appropriate. Based upon these facts, the court rejected the facility’s arguments and found the release to be ineffective, at least at the pretrial stage.

The court explained: “Whether or not [Trainer] accurately assessed [Client] and if the “exercise was appropriate for someone at her fitness level, given the circumstances, are facts for the jury to decide.” In short, the release had failed. Liability releases should be a slam-dunk defense to any litigation brought by a client. To compound the matter, the facility had failed to retain the client’s signed release. Though the client did not deny signing all the paperwork, a key piece of evidence had been inexplicably lost.

Keep these principles in mind as you review your contracts and releases. Be advised that laws vary from state to state, so consulting with an attorney in your jurisdiction is recommended.

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Tricia Schafer, JD

IDEA Author/Presenter
Bio: Tricia Schafer, JD, of Falbe Law PLLC in Phoenix, Arizona, counsels clients on reducing liabili... more less
Garner, B. 2009. Black's Law Dictionary (9th ed.). Eagan, MN: West Publishing.

May 2012

© 2012 by IDEA Health & Fitness Inc. All rights reserved. Reproduction without permission is strictly prohibited.

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