Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 173, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to require the purchaser of a health club to assume all liabilities of the health club, including contractual liabilities.

Your Committee received testimony in support of this measure from four individuals. Comments were received from the Office of Consumer Protection.

This measure arises from the public concern that the purchaser of a health club is not obligated by law to assume the memberships of the seller of the health club. Your Committee finds that this practice is unfair and unconscionable. Health club contracts that existed at the time of the sale should be rightfully assumed by the new owner for the life of that contract, notwithstanding contract provisions to the contrary.

Your Committee notes that section 486N-8(a), Hawaii Revised Statutes, specifically prohibits lifetime health club contracts. Therefore, this measure need not address that situation.

Your Committee has amended this measure by:

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 173, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 173, S.D. 2, and be placed on the calendar for Third Reading.