S3306 1R

An Act concerning the assignment of health club services contracts and amending P.L.1987, c.238.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 4 of P.L.1987, c.238 (C.56:8-42) is amended to read as follows:

4. a. Every contract for health club services shall be in writing. A copy of the written contract shall be given to the buyer at the time the buyer signs the contract.

b. A health club services contract shall specifically set forth in a conspicuous manner on the first page of the contract the buyer's total payment obligation for health club services to be received pursuant to the contract.

c. A health club services contract of a health club facility which maintains a bond, irrevocable letter of credit or securities, moneys, or other security pursuant to subsection a. of section 3 of this act shall set forth that a bond, irrevocable letter of credit or securities, moneys, or other security is filed or deposited with the Director of the Division of Consumer Affairs to protect buyers of these contracts who are damaged or suffer any loss by reason of breach of contract or bankruptcy by the seller.

d. Services to be rendered to the buyer under the contract shall not obligate the buyer for more than three years from the date the contract is signed by the buyer.

e. A contract for new or increased health club services may be cancelled by the buyer for any reason at any time before midnight of the third operating day after the buyer receives a copy of the contract. In order to cancel a contract the buyer shall notify the health club of cancellation by telephone to the health club facility location where the contract was entered into or online, if the contract was entered into online; by regular, registered, or certified mail received within the three-day period, return receipt requested; or personal delivery to the address specified in the contract. All moneys paid pursuant to the cancelled contract shall be fully refunded within 30 days of receipt of the notice of cancellation. If the customer has executed any credit or loan agreement through the health club to pay all or part of health club services, the negotiable instrument executed by the buyer shall also be returned within 30 days. The contract shall contain a conspicuous notice printed in at least 10-point bold-faced type as follows:

“NOTICE TO CUSTOMER”

You are entitled to a copy of this contract at the time you sign it.

You may cancel this contract at any time before midnight of the third operating day after receiving a copy of this contract. If you choose to cancel this contract, you must take any one of the following actions:

1. Send a signed and dated written notice of cancellation by regular, registered, or certified mail, return receipt requested;

2. Personally deliver a signed and dated written notice of cancellation to: ..................................... (Name of health club) ..................................... (Address of health club);

3. Personally place a telephone call to the health club facility location where the agreement was initially entered into; or

4. If you entered into the contract online, use either the direct link on the health club facility's Internet website, the user settings on your smartphone or tablet, or a termination email formatted and provided by the health club facility to cancel the contract online.

If you cancel this contract within the three-day period, you are entitled to a full refund of your money. If the third operating day falls on a Sunday or holiday, notice is timely given if it is mailed or delivered as specified in this notice on the next operating day. Refunds must be made within 30 days of receipt of the cancellation notice to the health club.

'Operating day' means any calendar day on which patrons may inspect and use the health club's facilities and services during a period of at least eight hours, except holidays and Sundays."

f. A health club services contract shall provide that it is subject to cancellation by telephone or written notice online, if the contract was entered into online; sent by regular, registered, or certified mail, return receipt requested; or personally delivered to the address of the health club specified in the contract upon the buyer's death or permanent disability, if the permanent disability is fully described and confirmed to the health club by a physician. In a cancellation under this subsection, the health club may retain the portion of the total contract price representing the services used plus reimbursement for expenses incurred in an amount not to exceed 10% of the total contract price.

g. A health club services contract shall provide that it is subject to cancellation by telephone or written notice online if the contract was entered into online; sent by regular, registered, or certified mail, return receipt requested; or personally delivered to the address of the health club specified in the contract upon the buyer's change of permanent residence to a location more than 25 miles from the health club or an affiliated health club offering the same or similar services and facilities at no additional expense to the buyer. In a cancellation under this subsection, the health club may require proof of the new permanent residence and may retain a prorated share of the total contract price based upon the date the notice was received plus reimbursement for expenses incurred in an amount not to exceed 10% of the total contract price.

h. A health club services contract shall provide that if a health club facility is closed for a period longer than 30 days through no fault of the buyer of the health club services contract, the buyer is entitled to either extend the contract for a period equal to that during which the facility is closed or to receive a prorated refund of the amount paid by the buyer under the contract.

i. A health club services contract shall not obligate the buyer to renew the contract. A buyer who entered into a health club services contract online shall be provided with the option to terminate the automatic renewal of the health club services contract online through a direct link or button on the health club facility's Internet website. The link or button shall be in a prominent location on the health club facility's Internet website and in clear and conspicuous text.

j. If a health club facility is not in existence on the date the contract is executed, the health club services contract shall provide that a buyer of a contract may cancel the contract if the facility is not open for business on a date which shall be set forth in the contract and receive a full refund of any deposit or payment on the contract. offerings

k.¹[A health club services contract shall provide that the] (1) If a¹ health club facility ¹is to change ownership but the new ownership does not result in contract alterations regarding a decrease in service offerings or increase in price upon the ownership transfer, the facility¹ shall notify, by mail or electronically ¹and at least 60 days in advance¹, the buyer of a ¹health club services¹ contract: of a change in ownership of the health club facility; ¹that membership rates and services remain the same;¹ the date of the transfer of ownership; ¹the business name of the facility under new ownership;¹ and ¹a stipulation¹ that the contract shall not be assigned to the new owner ¹[unless] if¹ the buyer of the contract ¹[provides written consent. The written consent may include electronic acknowledgement by a buyer of the contract that is sent, separately from the contract, in advance of any transfer of the facility ownership. If the new owner fails to obtain written consent from the buyer of the contract within 30 days of the change in ownership, the contract shall be deemed canceled, unless the buyer subsequently consents to its assignment] denies, through written or electronic communication, assignment of the contract to the new owners. If the buyer of the contract allows the contract to be assigned to the new owners of the health club facility, the buyer shall have up to 26 days after the transfer of facility ownership to nullify the contract. If any charges were made against the account of the buyer, including after a buyer requested nullification of a contract, during the 26-day period following the transfer of ownership, the health club facility shall have up to 10 business days after the nullification to issue a refund of the charges¹.

¹(2) If a health club facility is to change ownership and if new ownership results in contract alterations regarding a decrease in service offerings or an increase in membership rates upon ownership transfer, the facility shall notify, by mail or electronically and at least 60 days in advance, the buyer of a health club services contract: of a change in ownership; the new membership rates; the change in services; the business name of the facility under new ownership; the date of the transfer of ownership; and that the contract shall be assigned to the new owner if the buyer of the contract consents to the transfer through written or electronic communication to the health club facility within 30 days of the date of transfer. If the consent is not received by the health club facility within 30 days before the transfer of ownership, the contract will be deemed cancelled. The buyer of the contract shall have up to 26 days after the transfer of facility ownership to nullify the assignment of the contract. If any charges were made against the account of the buyer during the 26-day period following the transfer of ownership, including after a buyer requested cancellation of a contract, the health club facility shall have up to 10 business days after the cancellation to issue a refund of the charges.

(3) If a health club facility is to change ownership, the owner of the health club facility shall post a notice, at least 15 days in advance of the transfer in ownership and for 26 days after the transfer in ownership, in a prominent location in the facility with the following information:

(a) the business name of the facility under the new owner;

(b) the date of the change of ownership; and

(c) that the buyer of the contract may, up to 26 days after the transfer, elect to decline to have their contract assigned to the new owner.¹

l. As used in this section:

"Automatic renewal" means a plan or arrangement in which a health club services contract is automatically renewed at the end of a definite term for a subsequent term.

"Clear and conspicuous" means in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language.

(cf: P.L.2023, c.241, s.2)

2. This act shall take effect immediately and shall be applicable to health club services contracts entered into on or after that date.