the legal resource for fitness entrepreneurs
the legal resource for fitness entrepreneurs

4 Contract Myths Dispelled

You know from past posts what a contract is, and you know how to make one (and that maybe you shouldn’t try it yourself). But you will still see conflicting information on the internet – often from well-meaning people. Here we dispel some of the most popular contract rumors:

 

1. Template contracts won’t cut it.

We know that template contracts aren’t all created equally, but a good template contract is a great starting point. It can put you ahead of the game. The best plan is to have a local attorney draft a contract after a consultation, but this can be pricey.

Another great option is to purchase a good template contract (get ours here!). You can then tailor it to your needs, and consult with a local attorney to avoid potential litigation down the road.

 

2. Without a signature, there’s no contract.

Some contracts must be in writing, but an oral contract can be enforceable. It’s hard to prove the terms if they aren’t written down, but it’s not impossible. The court will base this on the actions of the parties involved, which ones support or disprove an oral contract.

Most of the people who are talking about this myth are probably looking at the Restatement of Contracts Statute of Frauds provision (which is old).

Here’s one example that may apply to you in the fitness industry:

  • Any agreement made for an amount greater than $X. (The specific monetary threshold varies by state. Typically, it hovers around $500.00 or more.)

This type of contract requires that the contract be in writing.

 

Promissory Estoppel

If you have a contract and the other party is arguing the validity, this may help. Promissory Estoppel can also cure a violation of the statute of frauds, making a contract valid in the law’s eyes.

Here’s how it works. Suppose one party materially changes their position, by an action or inaction, and suffers a detriment because the party relied upon another’s promise. In that case, the reliant party can enforce the contract under Promissory Estoppel.

Example: You agree with a client on a six-month training and meal plan for $550, but it isn’t written down. Your client then asks that you also check in with them twice a week. You now have more work to do and may need to turn down other clients to do this. But then, after agreeing to this, your client ghosts you. You bill them anyway, and they refuse to pay because they didn’t sign a contract.

If you decide to sue, the court may rule in your favor because you changed your position and was then punished for it by not receiving payment.

 

3. You can’t amend a contract. 

You may have heard that once a contract is signed, it can’t be changed or amended. This isn’t totally true. Before the contract is signed, it can be changed as much as you want. And then afterward, if the contract includes clauses that permit changes in writing, changes can be made, agreed to, and signed by all the parties.

Here’s an example of changing the contract before signing: Jeff wants to hire Patty to design a workout plan for him. He signs a photo release for Patty to use before/after photos on her website. Jeff isn’t on board with photos being used, so Patty removes that from the contract, prints a new copy, and they both sign it.

And here’s an example of changing it after signing: Jeff signed the contract and then realized that Patty could use his photos. So he asks Patty if they can amend the contract and she says yes. After making sure the contract has a modification clause, they can change it and add an amendment signed and dated by both people.

 

4. Everyone involved must sign a contract.

This is where someone may mention the doctrine of Privity of Contract. Only the people who agree to the terms are bound by them – which is what the signature signifies. One example of when a contract needs to be signed by a parent or guardian is if your client or potential gym member is under the age of 18. But at that point, the parent is your client and they’re the ones who will need to sign the contract.

 

Remember: every state is different and provisions for contracts are going to vary. Make sure you ask a local attorney to review the contract.

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