In the case of Pulcini v. Bally Total Fitness Corporation, the plaintiff entered into a three-year contract for gym membership with the defendant, which allowed defendant to deduct the monthly dues from the plaintiff’s bank account until the plaintiff cancelled the contract. In this case, Pulcini cancelled the contract before the end of the three-year term, but the gym continued to deduct the monthly dues. The court held that Pulcini could proceed with her cause of action against the defendant for violation of the Automatic Contract Renewal Act (the “Act”) because the contract clause providing for automatic renewal was not clear and conspicuous.
The Act provides that if a contract is subject to automatic renewal, the clause providing for automatic renewal must appear in the contract in a clear and conspicuous manner (read: bold print and/or upper caps and/or different type font). The Act further provides that if a contract does not comply with the Act, the automatic renewal provisions are not enforceable by a party who prepared the contract or directed its preparation.