Giving the "chop" to a monthly revolving contract at a local martial arts studioFrom time-to-time, Hanover Law is asked to give an opinion on civil actions in VA, DC, MD. A "civil action" is a lawsuit between two private parties. Usually a contract breach or suit for harm caused by some infraction or breach of duty. A great question was recently asked about revolving payment contracts for services at dance studios, martial arts studios, etc. I've included it here so everyone can benefit from the answer.
Me and my wife signed up with this martial arts studio in February 2013, we were charged $300 a month for private lessons. We have payed for all the lessons that we have taken even an extra month. We verbally agreed with my wife present during the signing of the contract that the contract could be canceled when I deployed or moved. So in May 2013 I was, in fact, deployed. I requested to cancel the service, he put up allot of fuss but eventually stopped the billing in June 13 after my wife gave him my orders.
Just the other day around the owner called asking where I was and when I was returning. I told him I am not coming back. He claimed that he just paused the account and he wants to collect right now. I don't have a cancellation notice in writing I trusted the guy and so did my wife. I have been back for over 6 months in the states and now he calls me to see where I am? I tried to talk to this guy he proceeded to cuss me out and tell me he doesn't care and I will pay. He said the only way you can cancel is I have to talk to the other company that processes the payments because he will not talk to me.
The answer is in the sauce, of course!
Namely, you need to look at the original contract and see what provisions exist for termination of services. I see you wrote a margin note, and they may have an impact.
Do NOT make any payments. You should demand, in writing via certified letter, that the studio stop contacting you unless it is in writing.
Typically, what happened was the owner of the studio sold your contract to a payment service. They probably paid him a flat rate for the entire contract (36 x 300 = $10,800 total contract value) of about 60% of the entire contract value (in this case ~$7000). When you stopped paying, the payment company took back the money it paid to the studio -- so the studio just got hit with a bill for ~$5000 or so (not sure, of course...just guessing, but this is the typical pattern).
As you can see, the studio has a vested interest in getting you to pay, as they just had a good chunk of money taken back from them (more likely than not, anyway).
After you write your letter -- if the studio responds back through an attorney, you'll need to hire counsel yourself. You may want to retain counsel just to review the contract PRIOR to writing to the studio (we could do that for you!), but that is not strictly necessary.
In the end, you need to always make sure you ask yourself this question: Am I doing the right and fair thing in this instance? If the answer is yes, then give no ground. If the answer is no, then you need to spend some time thinking of an honorable way to resolve the situation.
If you have any additional questions, give us a ring! We'd be glad to help. 703-402-2723.
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