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A periodic (eg monthly) membership contract can have two ways of dealing with temporary nonpayment of fees.

Suppose Alice joins a members club for a 6 month contract and after the third month she has a financial lapse and becomes unable to pay her membership fees until the following month. After 5 days of her fourth monthly payment falling due, her access to the facilities was suspended.

A month later she finally gets paid and would like to restore access to the club so she goes to make payment and they claim that in order to reinstate her membership she needs to make up the last month’s worth of fees even though her service was suspended during most of the month in respect of which they are demanded. Alice would instead like to just pay for the month ahead and call it a day, presumably also commensurately extending her contractual commitment period of 6 months to exclude the delinquent month.

Is the club’s expectation in breach of unfair contract terms regulations and thus unenforceable? See in particular example term 18 in part 1 of schedule 2 to the consumer rights act 2015.

Does the answer change if the service is rather for a website hosting service which temporarily disables the delinquent customer’s site?

In either case it seems like the situation would be different if they never suspended Alice’s access to the service/ facilities but instead maintained her access as contracted unconditionally while her civilly-recoverable liability for membership dues also continue to so unconditionally accrue. In this case, even if she didn’t use it, it would be more like rental arrears where liability accrues both for payments of fees and provisions of service for the whole contractually committed period. Ie, whether or not Alice has paid for April, her access is never revoked from January until June, but Alice’s liabilities continually accrue recoverable by the club in small claims court.

TylerDurden
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2 Answers2

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What does the contract say?

If it says they can, they can.

At common law, a contract term is unenforceable only if it’s unconscionable - that is, so onerous or one-sided that no one would ever agree to it. This isn’t even close to unconscionable.

Australia is unusual in that it makes unfair terms unenforceable under the Australian Consumer Law. However, terms that set the ‘upfront price’ are exempt - periodic payments are upfront if they are disclosed in the contract. However, even if it wasn’t it is not clear that suspending the service while in arrears causes “significant imbalance” between the parties - paying on time is something that is in the control of the consumer, not the supplier.

Dale M
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Here are some example terms that would allow the described scenario:

  1. Alice will pay the Club $180 (the Total), in payments of $30 per month, made by the first day of each month starting January 2023 and ending June 2023 (the Period).

  2. The Club will give Alice access to its facilities during the Period. But if Alice does not pay the Club $30 by the first day of a month during the Period (a Missed Payment), the Club may deny Alice access to its facilities until Alice pays the Missed Payment.

  3. If the Club denies Alice access to its facilities due to a Missed Payment, Alice will continue to owe the Total for the Period.

This answer was written when the question was at revision 3. I will not be updating it to keep up with changing and expanding scenarios.

Jen
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