After purchasing a fitness card, Ms. Chen developed an illness and was advised by her doctor to avoid intense exercise, so she proposed a refund to the fitness institution.

The fitness institution believed that Ms. Chen was canceling for personal reasons and demanded a penalty.

Is Ms. Chen considered a breach of contract? Is she entitled to a refund?

[Case Review]

Between July and August 2023, Ms. Chen signed two Course Agreements with a fitness institution, purchasing 100 private boxing lessons and 100 private regular fitness lessons, totaling a payment of CNY 84,000.

After taking 13 boxing classes and 6 regular classes, Ms. Chen felt discomfort in her waist and visited a doctor. The hospital diagnosed her with lumbar disc herniation and advise against strenuous physical exercise (including using fitness equipment, etc.).

Ms. Chen then requested a refund of the remaining balance, over CNY 75,000, from the fitness institution.

The fitness institution argued that Ms. Chen, by canceling the courses for personal reasons, was the breaching party and should bear the 30% penalty and 5% handling fee as stipulated in the Course Agreements, totaling over CNY 29,000and only agreed to refund the remaining balance of over CNY46,000.

As the two parties could not reach an agreement on the refund amount, Ms. Chen filed a lawsuit with the Changning District People's Court in Shanghai (hereinafter referred to as the "Changning Court").

[Case Study]

After trial, Changning Court held that after the establishment of a prepaid consumption contract, if fundamental conditions of the contract, such as the consumer's physical health, occur significant changes that could not have foreseen at the time of the contract conclusion and do not fall under commercial risks, continuing to perform the contract is obviously unfair to the consumer.

In this case, Ms. Chen requested to terminate the contract due to her own health conditions, supported by medical advise. Therefore, her conduct was reasonable and did not constitute a breach of contract. She should not bear any penalties or handling fees.

Accordingly, the court ruled that the fitness institution should refund the remaining amount of over CNY 75,000.

After the judgment, neither party appealed. The fitness institution voluntarily fulfilled its obligation to refund Ms. Chen.

I. A consumer's physical health constitutes the fundamental condition for a prepaid consumption contract

Article 533, Paragraph 1 of the Civil Code of the People's Republic of China (hereinafter referred to as the Civil Code) stipulates the principle of changed circumstances. Article 13, Paragraph 2 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Prepaid Consumption, promulgated in March 2025, represents a specific application of this principle in the field of prepaid consumption. This article clarifies that a consumer's physical health is a fundamental condition of a prepaid consumption contract. If there occurs significant changes in this condition that the parties could not have foreseen at the time of the contract conclusion and that do not fall under commercial risks, continuing to perform the contract would be obviously unfair to the consumer, and if the consumer and the operator fail to reach an agreement through negotiation, the consumer may request the termination of the prepaid consumption contract.

In this case, after Ms. Chen had been engaging in fitness activities for a period of time, her physical health condition underwent changes that could not have been foreseen at the time of purchasing the membership card. Continuing to perform the contract would be obviously unfair to her. Therefore, she should be legally entitled to terminate the contract.

II. Consumers are not liable for breach of contract when seeking refunds due to health reasons

The Course Agreement in question stipulates that if a consumer requests a refund for personal reasons, he shall bear a 30% penalty and a 5% handling fee before receiving the remaining amount. This clause should only apply to consumers' subjective breach of contract or malicious breach of contract, and does not cover situations where consumers exercise their statutory right to terminate the contract due to objective inabilityof performance. When a consumer claims to terminate a personal fitness contract due to health reasons, it is obviously unfair for him to continue to perform the contract due to his own objective reasons. This ground for termination is both legally and reasonably justified and does not constitute a breach-based termination. Therefore, the consumer should not be held liable for breach of contract.

It is important to note that Article 497 of the Civil Code, Article 26 of the Law of the People's Republic of China on the Protection of Consumer Rights and Interests (hereinafter referred to as the Consumer Rights and Interests Protection Law), and Article 9 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Prepaid Consumption all impose restrictions on the validity of standard terms provided by operators. In their business operations, operators should avoid using standard terms to unreasonably mitigate or exempt themselves from liability, increase consumers' liability, or restrict or exclude consumers' main rights. Otherwise, such terms will be deemed invalid due to violation of legal provisions.

[Representative Comments]

Chen Suping, Deputy to the Shanghai Municipal People's Congress and the Artistic Director of the Shanghai Changning District Hu Opera Intangible Cultural Heritage Center

She pointed out that in practice, it is common for consumers to find it easy to purchase membership cards but difficult to cancel them. Particularly when consumers have legitimate reasons, such as illnesses that make continuing exercise unsuitable, they still face high penalties to get a refund. This makes it challenging for consumers to exercise their right to a refund and also hampers the sound development of the fitness industry.

In this case, the people's court, relying on relevant clauses in the Civil Code, the Consumer Rights and Interests Protection Law, and the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Prepaid Consumption, clearly interpreted that a consumer's physical health constitutes a fundamental condition of a prepaid consumption contract. If there occurs significant changes in this condition that the parties could not have foreseen at the time of the contract conclusion and that do not fall under commercial risks, continuing to perform the contract would be obviously unfair to the consumer, and the law grants the consumer the right to terminate the prepaid consumption contract. Moreover, the consumer's act of terminating the contract under such circumstances is reasonable, and they should not subject to the high penalties stipulated in the contract. The judgment in this case effectively safeguards consumers' legitimate right to a refund and also promotes the further healthy and orderly development of the fitness industry, which is commendable.

[Relevant Laws]

I. Civil Code of the People's Republic of China

Article 533 After the establishment of a contract, if fundamental conditions of the contract occur significant changes that could not have foreseen at the time of the contract conclusion and do not fall under commercial risks, continuing to perform the contract is obviously unfair to the consumer, the party adversely affected may renegotiate with the other party. If the parties fail to reach an agreement within a reasonable period, the party may request the people's court or an arbitration institution to modify or terminate the contract.

...

II. Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Prepaid Consumption

Article 13...

After the establishment of a prepaid consumption contract, if fundamental conditions of the contract, such as the consumer's physical health, occur significant changes that could not have foreseen at the time of the contract conclusion and do not fall under commercial risks, continuing to perform the contract is obviously unfair to the consumer, the party adversely affected may renegotiate with the other party. If the parties fail to reach an agreement within a reasonable period, the party may request the people's court or an arbitration institution to modify or terminate the contract, the people's court shall support such a request.

(Case prepared by: Ding Ning and Jin Wenbin from the Changning Court)