We issued proceedings in the Spanish courts against Macdonald Resorts Spain S.A. (Leila Playa Club) seeking a declaration that the purchase contracts signed in 2003 and 2008 were null and void. The claim was based on breaches of Spanish timeshare law 42/1998, including a failure to provide a general description of the accommodation and information about the consumer’s right to withdraw. We also argued that the resort breached the maximum contract term of 50 years and that the contracts were signed following misrepresentation. In support of the claim, we submitted the purchase contracts alongside other documents.
On misrepresentation, Macdonald Resorts argued in its defence that there had been no misrepresentation because the claimants knew and understood the product. It also contended that it had not breached the 50-year maximum because Law 42/1998 did not apply, as its system was created before the law came into force.
The judge rejected the resort’s arguments:
“In relation to the applicable law to the present case, we must look at the Law 42/1998, in which the contentious contract should give the claimants the right to use more than one accommodation, for a fixed price, for more than three years, permanent but without the owner condition, therefore we are clearly facing a contract that confers a personal right to use multiple accommodations for a fixed period superior to three years but inferior to 50 years. This is the type of contract stated as null and void by the article 1.7 of the Law 42/1998. The aforementioned purchase contracts are therefore null and void”
On the argument that the law was not applicable, the judge said this must be rejected because any pre-existing systems similar to timeshare that exceed the legal limit should be treated as fraudulent and null and void (art. 1.7). The D.T. 2ª is based on respect for acquired rights and covers timeshare rights acquired before the law came into force under the agreed system, but it does not allow rights not yet transferred to breach legal rules; these must comply with the new law (STS 477/2014, 15th January 2015).
The judge found that the purchase contracts did not meet the requirements of article 1 of Law 42/1998, as the resort did not provide a description of the different accommodations the consumers could use, nor the real possibilities of making a reservation.
The judge also said this was a unilateral contract, where the supplier (the resort) set the terms and conditions, without real equality between the parties. The clients were offered products and benefits without respecting the required cooling-off period, or allowing an appropriate gap between the explanation of the product and the signing of the contract.
The claim succeeded and the judge declared the contract null and void on the basis of a breach of Spanish consumer legislation. The same reasoning appears in another case (Sentencia de la Audiencia Provincial de Málaga, 7th November 2005), in which the Court of Appeal held the contract should be deemed null and void because the vendor failed to meet its legal duty to provide the consumer with information about the accommodation and services offered.
The judge also found that the clients were not properly informed about the contract’s terms and conditions, and that the documentation provided did not meet the requirements needed to ensure the client was correctly informed.
We also claimed that Macdonald Resorts should pay compensation for delay in payment, namely legal interest on the amount owed from the date the claim was issued until payment was made in full.
Decision
- The contract between the parties is deemed null and void, together with any agreements annexed to it.
- Macdonald Resorts must reimburse the clients the sum of 11,839.22£s;, plus interest accrued from 17th September 2015 until payment is made in full.
- Macdonald Resorts Spain S.A. (Leila Playa Club) must also pay the costs incurred in this instance.
