The frustration of a holiday timeshare contract is a ‘knotty’ concept but real and pertinent with some issue which befalls many timeshare consumers.
The concept is ignored in many cases by resorts in the hope that the consumers who enjoy the facilities (they have bought and paid for and which are not fully delivered) won’t complain or attempt to recover the monies they are entitled to. However, we shall seek to explain Frustration as simply as we can.
A timeshare holiday is at risk if it is affected by a pre-existing condition/illness at the resort, which is proven to be continuing or by political, natural weather events or other things!
If something occurs without the fault of either party, to make the performance of the contract impossible, illegal or fundamentally different, then both parties would be exempt from the contract.
If the contract is judged to be frustrated, the Law Reform (Frustrated Contracts) Act 1943 explains that any money paid is recoverable and any other money due ceases to be payable (there are exceptions to this rule – expenses etc).
If say; one party gives an unqualified undertaking to perform the contract, then the principle of frustration will not, it seems, generally apply.
It is apparent from calls we receive, that timeshare resorts, where difficulties arise (political, health, material, consequential etc), often do not entertain consumer claims of ‘force majeure’. This is an important point!
Force majeure ‘chance occurrence, unavoidable accident’. It is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term ‘act of God’ (such as hurricane, earthquake, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations under the contract. In practice, most force majeure clauses do not excuse a party’s non-performance entirely but only suspends it for the duration of the force majeure.
Despite health or political risks, you can (for example) see that there are holidaymakers, who come what may, travel to such destinations, others are more cautious.
Another question is this; is a contract a one-way street? Must the timeshare consumer accept everything that a timeshare resort states, to the exclusion of their own research where risks are evident?
Contracts can be frustrated by events, but these ‘events’ tend to be dealt with by ‘force majeure’ clauses within the contract – if then the timeshare resort does not rely on ‘force majeure’ but there are other factors that could affect the operation of the contract, such as outbreaks of illness, food shortages, fuel shortages, curfews, security concerns, etc, is not the consumer entitled to claim that the contract is frustrated in submission of his evidence?
As we understand it (taken from the Textbook – Contract Law, Text, Cases & Materials – Ewan Mc Kendrick – Pages 877 to 883) in the case of Taylor v Caldwell, the judges thought that in order to claim that the contract is frustrated they would have to look at the contract itself and how it was drafted, then they would ask if whatever was contracted for would be made different by the events. If then the contract was seen to be radically different, then ‘Frustration of the Contract’ could come into play.
In another case, Ocean Tramp Tankers Corporation, we can see that the judge held that in order to claim that the contract is frustrated, the frustrating event had to be more than ‘onerous’ or more ‘expensive’ – it had to be positively unjust to hold the parties bound.
In the Holiday Law Textbook (Grant & Mason), there is a dialogue on P.238/239 about the penalties of what they refer to as ‘Anticipatory Frustration’.
They allude to an example of the Gulf War of 1991 and whether holidaymakers due to travel to India would be directly affected by the outbreak of war.
The quandary was that it would be likely that aircraft would have to be re-routed, thus imposing a greater cost to the tour operator, greater travelling time, in other words affecting the operation of the holiday.
In shaping this point, they imparted questions as to when the frustration would arise – when Kuwait was invaded; when the UN took action; upon the build-up of allied forces; if conflict appeared imminent, or when the war started? They state, “The law seems to be that even if hostilities had never broken out if it appeared to a reasonable person that holidays were about to be affected then a decision to treat the contract as frustrated would be justified”.
As you will see, we have emphasised the magnitude as to the consequences which could impart onto calamitous financial and personal consequences! In addition, your own research is also the key – what did you think upon signing the timeshare contract, did you plan on going on tours, relaxing by the pool etc; is the product now substantially different because of these events (health or political), have you lost the promise of the product and the ability and freedom to widely enjoy, the product?
In the case of health and timeshare, are you well and fit to travel, or is the condition you suffer from frustrating the contractual obligations you can no longer fulfil?
You need to spend time considering this issue, your own evidence and use it along with other rights to argue your position. In any event, it provides a reasonable argument in the case of illness and an argument which the resort will have to consider and risk assess before actioning any claim against you.
Frustration in English law is as explained in English contract law doctrine. It acts as a tool to set aside contracts where an unforeseen event either renders contractual obligations impracticable or drastically changes the party’s chief purpose for entering into the contract in the first place. Historically, there had been no way of setting aside an impracticable contract after their formation; it was not until 1863, and the case of Taylor v Caldwell, that the first phase of the doctrine of frustration became established.
Whilst the doctrine has seen development from its inauguration, it is still narrow in the application; Lord Roskill said that it is: “not lightly to be invoked to relieve contracting parties of the normal consequences of imprudent bargains.”
In a lot of the cases it is explained that there was an implied proviso in the contract which operated to release the parties from performing it, and in all of them, I think that was at bottom the principle upon which the court proceeded.
Last modified: 15th April 2020