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Kulick v. Spa Lady

A-2175-01T5 (N.J. Super. App. Div. 2003) (Unpublished)

CONTRACTS; DAMAGES—The right to impose a ten percent annual price increase is not the right to wait five years and then impose a fifty percent price increase but damages should be measured by looking not at the excess charges but at the cost of replacement services.

In 1980, a customer and a health club entered into an agreement providing for monthly dues of $18, subject to the health club’s “right to impose a ten percent annual increase.” The original fee was charged for approximately eleven years at which time the health club tried to raise the customer’s dues to $37 per month. “It justified the increase of more than ten percent at that one time on the ground that it had not raised the monthly due for ten or eleven years.” The lower court found that the increase violated the ten percent limitation and the Appellate Division agreed. Apparently, the lower court refunded the excess increase to the customer. The Appellate Division, however, found that the damages should have been measured by the difference between the customer’s cost at a new health club until the time of trial less the monthly dues that she would have paid at the old health club.

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