These regulations have been designed to establish rights for the consumers as a whole (including timeshare consumers) and over and above the laws of tort and general common law which the courts submit to in the jurisdictions of Europe.
All timeshare trader and suppliers who use standard contract terms with consumers must comply with these Regulations, which implement EU Directive 93/13/EEC on unfair terms in consumer contracts (the Unfair Contract Terms Directive).
The Regulations came into force on 1 July 1995 and have been amended several times. They were re-issued on 1 October 1999. The Office of Fair Trading (OFT) enforcement role has been shared with ‘Qualifying Bodies’, including all Local Authorities (providing a trading standards service), specialist regulators and Which?
This OFT/TCA guidance does not state the law, only a view on how the law may or will to be interpreted by the courts.
Under the regulations, the OFT has an ordained duty to mull over any complaint received about unfair terms. Where a term (s) in a contract is considered unfair, enforcement action may be taken on behalf of timeshare consumers to stop its use in part or whole and if necessary by seeking a court injunction in England and Wales or an interdict in Scotland.
The OFT cannot take action on behalf of you or seek redress for individual timeshare consumers.
However, the Regulations transmit to timeshare consumers certain legal rights in respect of unfair terms. Being aware of this act, timeshare consumers can take their own legal advice and take action independently of any planned or preserved action taken by the OFT or the other enforcers.
A term found by any court to be unfair is not binding on timeshare consumers.
In addition, Part 8 of the Enterprise Act 2002 gives the OFT and certain other bodies (enforcers) separate powers against traders who breach and continually breach consumer legislation.
Under Part 8, the OFT and other enforcers can seek enforcement orders against businesses that breach UK laws giving effect to specified EC/EU Directives – including but not limited to the Unfair Contract Terms Directive. This is generally actioned where there is a real (as opposed to fanciful) threat of harm to the collective interests of timeshare consumers.
In addition, the Enterprise Act creates the legal framework enabling the OFT to perform a coordinating role to ensure that action is taken by the most appropriate body noted in unfair contract terms guidance and dependant on each case.
The Test of Fairness
The Regulations apply a test of fairness to all timeshare standard terms (terms that have not been individually negotiated) in timeshare and club contracts used by businesses with timeshare consumers, subject to certain exceptions.
The main exemption is for terms that set the price or describe the main subject matter of the contract (usually known as ‘core terms’) provided they are in a plain and intelligible language. The Regulations thus apply to what is commonly called ‘the small print’ of standard form consumer contracts.
A standard term is unfair ‘if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of any timeshare consumer.
Unfair Terms Are Not Enforceable Against the Consumer
The requirement of “good faith” embodies a general principle of “fair and open dealing”. It means that terms should be expressed fully, clearly and legibly and that terms that might disadvantage the consumer should be given appropriate prominence (i.e in bold).
However transparency is not enough on its own, as good faith relates to the substance of terms as well as the way they are expressed and used.
It requires a supplier of a timeshare product or service not to take advantage of consumers and users who are in a weaker bargaining position, or using their lack of experience, in deciding what their rights and obligations shall be.
Timeshare contracts should be drawn up in a way that respects consumers’ legitimate interests.
In assessing fairness, we take note of how a term could be used. A term is open to challenge if it is drafted so widely that it could cause consumer detriment. It may be considered unfair if it could have an unfair effect, even if it is not presently being used unfairly. eg Lord Bingham of Cornhill in Director General of Fair Trading v First National Bank plc UKHL 52. For instance, if a club changes its purpose and alters clauses in the constitution-so that a forward purpose could be introduced-then those new terms would be removed from the contract.
Last modified: 15th April 2020