DEFENSES TO ENFORCEMENT OF A TIMESHARE CONTRACT

DEFENSES TO ENFORCEMENT OF A TIMESHARE CONTRACT

Contractual defenses generally applicable to the enforceability of any contract will apply equally well in the context of timeshare law. However, due to the nature of timeshare sales, certain common complaints seem to arise time and again. These have primarily to do with the disparity in resources, bargaining power, and familiarity with the nuances of timeshare offerings typically characterizing these transactions. Collectively, these factors tend to create a recipe for abusive practices giving rise to the kinds of grievances so commonly heard. Thus, this article endeavors to set forth those defenses that most frequently occur in this arena.

      A. Fraud-in-the-Inducement:

Or “common law fraud”, this is technically, the intentional use of deceit, a trick or some dishonest means reasonably relied upon to deprive another of money, property or a legal right[1]. This is by far the most common legal defense asserted to the enforcement of a timeshare sales contract. Falsehoods typically cited include statements that the timeshare is a ‘real estate investment’, that it ‘appreciates’ in value, that it is easily ‘resold’, that the seller has a ‘buy-back’ program, that it can be easily ‘sub-leased’ to defray the costs of ownership, and/or that it accords ‘exclusive’ access to a resort network. One cannot absolve himself of fraudulent conduct by inserting disclaimers or waivers in a contract, (Shelby Electric Company, Inc. v. Forbes, 205 S.W.3d 448, 455 (Tenn. Ct. App. 2005), as this would constitute an illegal provision, which is by definition unenforceable. (Scovill v. WSYX/ABC, Sinclair Broad. Grp., Inc., 425 F.3d 1012 (6th Cir. 2005).

      B. Statutory Fraud:

In many, if not all U.S. jurisdictions, the presence of common law fraud will dovetail into a cognizable statutory claim under the applicable state consumer protection statute, typically codified under as an “unfair deceptive sales practices act”, or the like.[2] These will generally have provisions for the recovery of attorney fees and costs for a prevailing consumer, and even exemplary damages if willful misconduct is present.

      C. Incapacity:

Often, elderly consumers become the victims of unscrupulous conduct during timeshare sales. Particularly if the consumer has a documented medical condition involving dementia or any diagnosis giving rise to compromised faculties, this defense will preclude the enforcement of a contract where exploitation has occurred.[3] Spahr v. Secco, 330 F.3d 1266 (10th Cir. 2003).

      D. Duress:

As the word implies, compelling or extenuating circumstances surrounding the course of dealing or execution of a timeshare sale may suggest this defense.[4] Some examples specific to timeshare cases include situations where a consumer is taken to a remote place with no return transportation, where parents are separated from their children, and/or where the sales presentation becomes so protracted, confining, or overbearing that the consumer is willing to sign off on the documentation merely to escape the pressure of the situation.

      E. Failure of Consideration:

In the timeshare law milieu, this defense becomes applicable, particularly where the consumer derives no cognizable benefit from having signed the contract. Indeed, she may well be in a position less favorable than one who endeavors to make reservations anonymously, online, at resorts within the developer’s network. With astounding frequency, the unwitting new ‘member’ will find that she cannot book stays at preferred times and accommodations through the ‘membership’ portal, whereas a non-member booking through a third party such as Expedia or Priceline can. In other words, the timeshare discriminates against members in favor of non-members (who will presumably be forced to sit through a sales presentation, and unwittingly also then trapped into ‘membership’.)

By any reasonable standards, this is not merely a raw deal. The timeshare is literally a net liability. This is sometimes called ‘frustration of purpose’. Crown Ice Mach. Leasing Co. v. Sam Senter Farms, Inc., 174 So. 2d 614, 616 (Fla. Dist. Ct. App. 1965); Billian vs Mobil Corporation, 710 So.2d 984, 991 (Fla 4^th DCA En banc 1998).

[1] https://dictionary.law.com/Default.aspx?typed=fraud%20in%20the%20inducement&type=1

[2] See, e.g., Cal. Civ. Code §§ 1770 through 1785. https://law.justia.com/codes/california/2010/civ/1770.html

[3] https://advance.lexis.com/document/?pdmfid=1000516&crid=82b50566-8c78-4e4e-88d3-8413995eea09&pddocfullpath=%2Fshared%2Fdocument%2Fcases%2Furn%3AcontentItem%3A48S4-CWX0-0038-X0P7-00000-00&pdcontentcomponentid=6394&pdshepid=urn%3AcontentItem%3A7XWP-B5H1-2NSD-P1VK-00000-00&pdteaserkey=sr0&pditab=allpods&ecomp=nzgpk&earg=sr0&prid=2adbadf3-1264-4626-9a0c-ccfd240b1a72

[4] https://thelawdictionary.org/article/what-is-duress/