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We are a karate business in North Carolina. Before any introductory

Customer Question
We are a karate business...
We are a karate business in North Carolina.
Before any introductory class we have parents sign a waiver that says that they understand there is a no refund money on any money they will pay ATA karate.
If they decide to enroll they can pay in full their MEMBERHSIP. The agreement states that they have 3 business days to cancel after they sign it. The agreement also states that PAYMENTS IN FULL WILL NOT BE REFUNDED. Are we obliged by law to refund their money? What if we gave them a uniform ? Are we also losing the money on their uniform? We also have stated in our agreement that there is a NONREFUNDABLE deposit of usually $150.
Is that ok?
Submitted: 2 years ago.Category: Consumer Protection Law
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Answered in 2 minutes by:
7/6/2015
Consumer Protection Lawyer: Ely, Counselor at Law replied 2 years ago
Ely
Ely, Counselor at Law
Category: Consumer Protection Law
Satisfied Customers: 102,923
Experience: Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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Are we obliged by law to refund their money?
No. "No refund" clauses are legally acceptable unless they are based on fraud or misleading information. Since the parents understand and agree to a no refund clause IN WRITING, the business is not obligated to refund them for any prepaid fees.
What if we gave them a uniform ?
The same answer applies.
We also have stated in our agreement that there is a NONREFUNDABLE deposit of usually $150.
Is that ok?

It is. A no-refund clause is enforceable provided it is not part of an action to defraud an individual.
I hope this helps and clarifies. Gentle Reminder: Use the SEND or REPLY button to keep chatting, or please rate when finished. You may always ask follow ups at no charge after rating. Kindly rate my answer as one of the top three faces/stars and then SUBMIT, as this is how I get credit for my time with you. Rating my answer the bottom two faces/stars or failing to submit the rating does not give me credit and reflects poorly on me, even if my answer is correct. I work very hard to formulate an informative and honest answer for you; please reciprocate my good faith.
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Customer reply replied 2 years ago
ok so I want to double check this with you because I just received letter from North Carolina Justice Department and they are providing me with North Carolina prepaid Entertainment Contracts statute. In them one of the chapter 6-121 states that the buyer has the right to cancel within 3 business days after signing the agreement. And if they do then we are obliged to refund any money they paid. However our agreement and personal analysis state that there is a no refund policy. I just want to make sure that we are not doing something illegal.
Consumer Protection Lawyer: Ely, Counselor at Law replied 2 years ago
Thank you.

§ 66-121. Buyer's right to cancel.
(a) In addition to any right otherwise to revoke an offer or cancel a sale or contract, the buyer has the right to cancel a prepaid entertainment contract sale until midnight of the third business day after the buyer signs a contract which complies with G.S. 66-119(4).
(b) Cancellation occurs when the buyer gives written notice of cancellation to the seller at the address stated in the contract.
(c) Notice of cancellation, if given by mail, is given when it is deposited in the United States mail properly addressed and postage prepaid.
(d) Notice of cancellation need not take a particular form and is sufficient if it indicates by any form of written expression the intention of the buyer not to be bound by the contract.
(e) For purposes of this Article, business days are all days other than Saturdays, Sundays, holidays, and days on which the seller's facility is not open to the buyer. (1979, c. 833, s. 1.)

Well, here is the thing. The NC Dept of Justice has then taken the STANCE that the karate studio is an ENTERTAINMENT business. This must be a recent opinion.
IF SO, then no-refunds are not allowed.
However, WHAT IS entertainment is NOT DEFINED clearly.
What a business in your situation can do is:
1) Agree, capitulate, and then not enforce the no-refunds clause, or
2) Argue that this legislation does not apply to a karate dojo. "The basic rule is to ascertain and effectuate the intent of the legislative body, George v. Town of Edenton, supra; Cogdell v. Taylor, 264 N.C. 424, 142 S.E.2d 36 (1965); Bryan v. Wilson, 259 N.C. 107, 130 S.E.2d 68 (1963); 56 Am.Jur.2d Municipal Corporations § 398 (1971). The best indicia of that intent are the language of the statute or ordinance, the spirit of the act and what the act seeks to accomplish. Stevenson v. City of Durham, 281 N.C. 300, 188 S.E.2d 281 (1972) and cases cited therein." COASTAL READY-MIX, ETC. v. BD. OF COM'RS, ETC., 265 SE 2d 379 - NC: Supreme Court 1980.
If #2 is chosen, then this may end up in Court. However, one wants to be careful and if #2 is chosen, hire an attorney to possibly file now to challenge that standing/interpretation, rather than to wait and having them try to shut down the business and/or fine or bring criminal charges.
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