The Timeshare, Holiday Products, Resale and Exchange Regulations 2010 - A Guide for Business
These guidance notes have been produced to provide guidance to business on the above regulations.
However, they do not carry any legal authority and should be read in conjunction with the legislation itself.
Overview
On 23 February, 2011 the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (the Regulations) came into force and will apply across the UK. The Regulations transpose into UK law EU Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts (the Directive). They contribute to the important objectives of boosting consumer confidence in the timeshare industry and eliminating the operations of rogue traders which bring legitimate traders into disrepute and cause considerable problems for consumers.
The Directive replaces Directive 94/47/EC on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable property on a timeshare basis.
The Regulations:
implement the Directive and replace entirely the current regime in the UK by repealing the Timeshare Act 1992 and revoking the Timeshare Regulations 1997. Ancillary regulations and orders such as the Timeshare (Repayment of Credit on Cancellation) Order 1992 will fall when the Act and the regulations are removed
- cover timeshare, long term holiday product, resale and exchange contracts (regulated contracts), although some arrangements are excluded
- make provisions relating to the advertising of regulated contracts
- require important key information to be provided in advance of a contract being agreed and in a standardised form
- make provisions relating to the form and content of the regulated contract
- make provisions relating to the language of the regulated contract and the pre-contractual information
- provide a consumer with a right to withdraw from a regulated contract within a standard 14 day withdrawal period, and the additional right to withdraw from a long-term holiday product contract when payment of the second and subsequent instalments become due
- ban any payment in advance of the completion of the withdrawal period of the regulated contract
- set out provisions for payment for a long-term holiday product contract by way of yearly instalments
- provide for the automatic cancellation of a related credit agreement and other ancillary contracts
- include sanctions and, where appropriate, criminal offences for non compliance. The Regulations also provide for contractual remedies for consumers
- set the penalty for offences to a fine not exceeding the statutory maximum
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Q & A to help you understand how the Regulations may affect your business
Scope of the Regulations
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Q: What types of contracts are covered by the Regulations?
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Q: Will the Regulations apply to Business to Business contracts?
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Q: Why do the regulations refer to the EEA or the European Economic Area?
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Q: Will the UK Regulations apply where the contract is governed by the law of another State which is a member of the European Economic Area?
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Q: Can the consumer waive their rights under the Regulations by agreeing that the contract should be governed by the law of a third country (i.e. a non EEA member State)?
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Q: Are any types of contract specifically excluded from the Regulations?
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Q: Are contracts for ‘package’ holidays covered by the Regulations?
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Q: Do the Regulations cover timeshare accommodation in movable property such as boats?
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Adverising and Markerting
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Q: Is failure to comply with Regulation 14 (Advertising and Marketing) a criminal offence?
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Q: Does the ‘trader’ for the purposes of the advertising and marketing rules in Regulation 14 include any party involved only in the publication or dissemination of the advertisement. For example a newspaper or magazine carrying the advertisement or a person distributing leaflets?
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Pre-contractual information
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Q: What information do I have to provide to the consumer before they enter into a contract?
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Q: Regulation 12 requires that the trader provide the consumer with the pre-contractual information ‘in good time’ before entering into the contract. What constitutes ‘in good time’?
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Q: Do I have to hold stocks of all my sales materials and contract in all of the official languages of the EEA?
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Q: Is the trader under any obligation to make the consumer aware of the right to have the pre-contractual information provided in a language of the consumer’s choice?
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Q: Would a trader showing the consumer the pre-contractual information on a computer screen be likely to meet the requirement of Regulation 12 for the pre-contractual information to be given ‘in writing’?
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Q: Can the trader charge for the provision of pre-contractual information?
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Q: Is failure to comply with Regulation 12 (Key information) a criminal offence?
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Q: Where the consumer enters into a timeshare agreement, and also acquires exchange rights, is the trader required to provide the consumer with Schedule 1 (Timeshare contracts) key information only or Schedule 4 (Exchange contracts) information as well?
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Contractual information
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Q: What information do I need to include in the contract?
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Q: What if the information has changed since I gave it to the consumer as pre-contractual information?
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Q: Is failure to comply with Regulation 15 (Contract formalities) a criminal offence?
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Q: Is failure to comply with Regulation 16 (Obligations of Trader on entering a contract) a criminal offence?
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Q: Is failure to comply with Regulation 17(Language of the Contract) a criminal offence?
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Q: Is failure to comply with Regulation 18 (Translation of contract into the language of a member State in which immoveable property rights in relation to which a timeshare contract is concerned is situated) a criminal offence?
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Right to withdraw
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Q: Do I have to give the consumer a right to withdraw from the contract?
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Q: Does the consumer have to use the standard withdrawal form?
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Q: When does the 14 day withdrawal period start?
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Q: What does “conclusion of the contract” mean?
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Q: When does the withdrawal period end?
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Q: What are the obligations on the trader with regard to the cancellation of a related credit agreement?
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Q: Where timeshare and exchange contracts are linked during the same sales process, does a subsequent withdrawal period apply after the withdrawal period applicable to the timeshare contract has expired?
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Q: Does the consumer still have the opportunity to contact the trader before the withdrawal period has expired and ask for the contract to be varied in some way (for example to renegotiate the price, or to seek an alteration to the weeks of occupation)?
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Q: If the consumer has used the services available under the contract before they decide to withdraw within the withdrawal period, or the extended withdrawal period can I charge them for services rendered?
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Payment
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Q: When can I collect payment?
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Q: Is failure to comply with Regulation 25 (Accepting payment in advance of the end of the withdrawal period) a criminal offence?
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Q: The regulations allow for payment when a resale contract is “otherwise terminated”. What does this mean?
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Q: Is failure to comply with Regulation 26 (Payment Schedule – Long Term Holiday Products) a criminal offence?
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Enforcement
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Q: Who can enforce these regulations?
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Q: Is failure to comply with Regulation 33 (Obstruction of Authorised Officers) a criminal offence?
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Q: What are the penalties in the event of a successful prosecution for non compliance with the Regulations?
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Q: Regulation 34 makes provisions for Civil proceedings, what does it mean?
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Feedback
For further information or feedback about the guidance please contact:
Kevin Davis
Consumer and Competition Policy Directorate
Department for Business, Innovation and Skills
3rd Floor Vic 1
1 Victoria Street
London SW1H 0ET
Tel: 020 7215 0329
E-mail: kevin.davis@bis.gis.gov.uk
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Scope of the Regulations
Q1: What types of contracts are covered by the Regulations?
Answer Q1
: The Regulations apply to the sale and marketing of the following types of contract:
- ‘Timeshare contract’ - a contract of a duration of more than one year under which a consumer, for consideration, acquires the right to use one or more overnight accommodation for more than one period of occupation. This includes, for example, timeshare rights in accommodation within a pool of accommodation or which allow use of accommodation within a pool of accommodation
- ‘Long term holiday product contract’ - a contract of a duration of more than one year under which a consumer, for consideration, acquires primarily the right to obtain discounts or other benefits in respect of accommodation in isolation or together with travel or other services
- ‘Resale contract’ - a contract under which a trader, for consideration, assists a consumer to sell or buy a timeshare or a long term holiday product
- ‘Exchange contract’ - a contract under which a consumer, for consideration, joins an exchange system which allows that consumer access to overnight accommodation or other services, in exchange for granting to other persons temporary access to the benefits of the rights deriving from that consumer’s timeshare contract.
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Q2: Do the Regulations apply to Business to Business type contracts?
Answer Q2 : No. The Regulations apply only apply to contracts between a ‘trader’ and ‘consumer’. The limited coverage of the Timeshare Act and the Timeshare Regulations 1997 in respect of business to business transactions has not been retained.
A “trader” is defined as a person acting for the purposes relating to that person’s trade, business, craft or profession, or, anyone acting in the name of or on behalf of such a person. In practice, this means that contracts and the sales practices related to the sale of contracts remain subject to the regulations whether they are sold direct by the contracting party or by an agent for the contracting party.
A “consumer” is defined as an individual who is not acting for the purposes of a trade, business, craft or profession.
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Q3: Why do the regulations refer to the EEA or the European Economic Area?
Answer Q3 : The Directive falls within the European Economic Area agreement which means that the Directive also applies to the non EU members of the EEA (Iceland, Liechtenstein and Norway).
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Q4: Will the UK Regulations apply where the contract is governed by the law of another State which is a member of the European Economic Area?
Answer Q4 : The Regulations will not apply where the contract is governed by the law of another EEA state unless it is to any extent also subject to UK law.
As with other contracts, and as is the case now, the law which applies in any individual case with regard to contracts agreed within the European Economic Area will be determined on a case by case basis with reference to the contract and, where necessary, the relevant European treaties on applicable law.
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Q5: Can the consumer waive their rights under the Regulations by agreeing that the contract should be governed by the law of a third country (i.e. a non EEA State)?
Answer Q5 : No – even where the applicable law is the law of a third country (i.e. a non EEA state) the Regulations will apply where there is a sufficient link with the EEA.
In the case of immovable property, the Regulations will apply if the property is in an EEA state and the UK has jurisdiction in relation to the contract.
In other cases (i.e. where it is not immovable property) the regulations will apply if the contract falls within the scope and the trader carries on commercial or professional activities in the UK or directed at the UK.
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Q6: Are any types of contract specifically excluded from the Regulations?
Answer Q6 : Yes. A list of excluded arrangements is included at Regulation 6 and includes:
- multiple reservations of accommodation to the extent that they do not imply rights and obligations beyond those arising from the separate reservations
- this ensures , for example, that agreements by hotels to allow a customer to book a room or rooms in a hotel for a series of stays under their usual terms and conditions (even when they are booked more than a year in advance) are not subject to these regulations
- a lease agreement which provides for a single continuous period of occupation
- a loyalty scheme, operating within a group of hotels, which provides consumers with discounts on future stays at hotels within the group where—no consideration is payable in respect of membership of the scheme, and consideration payable by consumers for accommodation at hotels within the group is not payable primarily for the purpose of obtaining discounts or other benefits in respect of accommodation; and
This would cover normal loyalty schemes and clarifies that they should not be considered to fall within the definition of a long-term holiday product contract.
Our view is that these types of product, even where some right to use accommodation is offered alongside the investment aspects, are not covered by the Directive. However effecting and carrying out a contract of insurance is a regulated activity for the purposes of the Financial Services and Markets Act 2000 so these products are subject to that regulation.
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Q7: Are contracts for ‘package’ holidays covered by the Regulations?
Answer Q7 : If a contract which is covered by the Regulations also happens to fall with the definition of a ‘package’ within the package travel regime, then both sets of regulations apply.
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Q8: Do the Regulations cover timeshare accommodation in movable property such as boats?
Answer Q8 : The definition of ‘timeshare’ covers timeshare in any overnight accommodation. This would include boats or caravans etc.
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Advertising and Marketing
Q9: Is failure to comply with Regulation 14 (Advertising and Marketing) a criminal offence?
Answer Q9 : In our view, failure to comply with the substantive requirements in relation to marketing and sales (Regulations 14(1) and (2)) would give rise to an offence under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) of misleading ‘omission’ or ‘action’. Regulation 6(3) of the CPRs specifically provides that information required by Community obligations in relation to commercial communications is material and therefore we consider that the CPR offences would apply.
The Directive and the regulations include detailed and specific provisions regarding marketing and sales events. This is because marketing and sales events can provide rogue traders with an ideal opportunity to mislead and pressure consumers into entering contracts which they may subsequently regret. Given the long term and often high cost nature of the contracts involved it is essential that consumers are protected against this type of behaviour. The provisions aim to ensure the consumer fully understands the nature of the product being advertised and we think that a failure by the trader to comply with regulations 14(1) or (2) would be likely to impact on the consumer’s behaviour and would therefore give rise to an offence under the CPRs.
Guidance on the CPRS is available at:
Consumer Protection Regulations
Failure to comply with Regulation 14(3) (ban on selling or marketing timeshare or long-term holiday product contracts as investments) is an offence under these Regulations. We think in many cases there will also be an offence under the CPRs for breach of this requirement. However, as it might not be absolutely clear in a particular case that the timeshare is not an investment we think that relying on the CPRs would place an unnecessary burden on enforcers – i.e. they would need to show that the timeshare could not be an investment. We have sought to remove any doubt about whether or not an offence has been committed.
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Q10: Does the ‘trader’ for the purposes of the advertising and marketing rules in Regulation 14 include any party involved only in the publication or dissemination of the advertisement. For example a newspaper or magazine carrying the advertisement or a person distributing leaflets?
Answer Q10 : There is no offence specified in the Regulations relating to the requirements of Regulations 14(1) and (2) because we consider not meeting those requirements would be covered by offences under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).
The question of whether a person distributing leaflets has committed an offence will depend on whether they are viewed as a trader carrying out the relevant commercial practice. This will depend on the circumstances of the case.
For publishers, the relevant offence in the CPRs contains the “Innocent publication of advertisement defence” at CPRs Regulation 18.
There is an offence specified in the Regulations in relation to the ban on marketing as an investment in Regulation 14(3). This offence also has the a defence for “innocent publication”.
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Pre-contractual information
Q11: What information do I have to provide to the consumer before they enter into a contract?
Answer Q11 :
You must provide all of the key information as set out in the relevant standard information form for the type of contracts you are selling. All of the information in parts 1 and 2 of the form must be provided on the form, which must not be changed. All of the information listed in part 3 of the form can either be provided on the form, or separately (for example, in a brochure or in the contract). If separately, part 3 of the form must indicate where that information can be obtained. The information must be provided in good time before any contracts are agreed.
If you are holding a promotion or sales event, for example, giving a presentation, the information must also be available to consumers for the duration of that event.
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Q12: Regulation 12 requires that the trader provide the consumer with the pre-contractual information ‘in good time’ before entering into the contract. What constitutes ‘in good time’?
Answer Q12 : The phrase “in good time” reflects the wording of the directive. In our view this means that the consumer should have adequate opportunity to be able to familiarise themselves with the information so that a decision to purchase may be properly informed. However, what is required may depend on the individual circumstances of a situation. We think the seller will need to exercise some judgement in individual cases, taking into account, for example, any obvious characteristics of a particular consumer which may mean that it would be appropriate to allow more time than usual.
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Q13: Do I have to hold stocks of all my sales materials and contract in all of the official languages of the EEA?
Answer Q13 : No. Businesses are not required to hold stocks of the precontractual information and contracts in all languages, just those languages of the consumers with whom they choose to trade.
The language requirements reflect the requirements of the Directive. We would not, in any case, wish to diminish the right of consumers to be provided with important information and contracts in a language with which they are fully familiar. This is the reason why the consumer has the choice of language.
We believe most businesses will have a very good idea, from experience, of the languages in which it would be wise hold the information so that they are ready to make a sale when the occasion arises.
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Q14: Is the trader under any obligation to make the consumer aware of the right to have the pre-contractual information provided in a language of the consumer’s choice?
Answer Q14 : Yes. The trader must give the consumer the opportunity to nominate one of the possible languages they are entitled to, that is either one of the official languages of an EEA state in which the consumer normally resides, or the language of an EEA State of which the consumer is a national.
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Q15: Would a trader showing the consumer the pre-contractual information on a computer screen be likely to meet the requirement of Regulation 12 for the pre-contractual information to be given ‘in writing’?
Answer Q15 : No. We consider that “in writing” is construed broadly to cover information held electronically where it is capable of being reproduced in a legible form. We do not consider that displaying information on a computer screen during a consultation or presentation would comply with Regulation 12. In particular 12(1)(a) requires the trader to give the consumer the key information. Displaying information is not giving or providing information in writing. Providing the information in a physical form which the consumer can take away with them or in electronic form which they may store on their own equipment and recall unchanged for future reference would, in our view, be to “give” the consumer that information.
Traders should bear in mind the purpose of the regulations is that the consumer should be provided with the information in good time before a contract is concluded or agreed so that they may have ample opportunity to read and understand it.
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Q16: Can the trader charge for the provision of pre-contractual information?
Answer Q16 : No. The pre-contractual information must be provided free of charge.
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Q17: Is failure to comply with Regulation 12 (Key information) a criminal offence?
Answer Q17 : In our view failure to provide the information required or providing false or misleading information would already be an offence (of either misleading action or misleading omission) under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).
The relevant offences in the CPR apply where the commercial practice would be likely to impact on the transactional decision of a consumer – e.g. leads them to enter into a contract they would not otherwise have entered into. The Directive is very specific on the pre-contractual information that must be provided. Failure to provide this key information or failure to provide it in the language required, or providing false information on these matters is, in our view, likely to impact on the consumer’s transactional decision. For example, information about the consumer’s rights to use the timeshare, the price and any additional costs, and the right to withdraw, are key information that the consumer needs in order to make an informed decision when entering a contract or when deciding whether or not to withdraw from it. So although it is not an offence on the face of these regulations, failure to comply with Regulations 12(1)-(4) and (6)-(8) would, in our view, give rise to an offence under the CPRs.
However, failure to comply with Regulation 12(5) - not providing the consumer with the pre-contractual information in the set format etc. - would be an offence under the Regulations. In our view, failure to comply with these specific requirements with regard to format are unlikely to fall within the scope of offences under the CPRs since it doesn’t necessarily follow that information that doesn’t comply with the format requirements will be unintelligible or ambiguous and therefore affect the transactional decision.
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Q18: Where the consumer enters into a timeshare agreement, and also acquires exchange rights, is the trader required to provide the consumer with Schedule 1 (Timeshare contracts) key information only or Schedule 4 (Exchange contracts) information as well?
Answer Q18 : If both a timeshare contract and an exchange contract are being sold then both sets of key information must be provided. Similarly, if a single contract happens to fall within both definitions, then all of the information in schedules 1 and 4 must be provided.
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Contractual information
Q19: What information do I need to include in the contract?
Answer Q19 : You must include all of the key information as part of the contract and you must include the identity place of residence and signature of each of the parties and the date and place of where the contract is agreed (concluded). When you provide the consumer with their copy or copies of the contract you must also provide them with standard withdrawal form.
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Q20: What if the information has changed since I gave it to the consumer as pre-contractual information?
Answer Q20 : Any changes to the key information which appear in the contract must be expressly agreed by the consumer. Proof that a change has been expressly agreed by the consumer might, for example, be their separate signature next to the relevant information, or perhaps a separately signed addition to the contract explaining clearly the changes.
No other changes are permitted except those which result from unusual, unforeseeable circumstances which are beyond the control of the trader, the consequences of which could not have been avoided even if all due care had been exercised. This is a tough test and is only likely to be met in very exceptional situations. Traders should therefore take care that their contracts reflect clearly the key pre-contractual information they have provided to the consumer before agreeing the contract.
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Q21: Is failure to comply with Regulation 15 (Contract formalities) a criminal offence?
Answer Q21 : Yes. Failure to comply with the formalities in Regulation 15 or to change the contract in a way which is not permitted under regulation 15 would be an offence under the Regulations.
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Q22: Is failure to comply with Regulation 16 (Obligations of Trader on entering a contract) a criminal offence?
Answer Q22 : Yes. Failure to draw the consumer’s attention to the relevant parts of the contract, to obtain the consumers signature in relation to those parts of the contract, or to provide a copy of the contract at the time of its conclusion (agreement) would be an offence under the Regulations.
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Q23: Is failure to comply with Regulation 17 (Language of the Contract) a criminal offence?
Answer Q23 : In our view, failure to comply with the substantive requirements in relation to regulations 17(1) to (3) would give rise to an offence under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) of misleading ‘omission’ or ‘action’. A failure to provide the contract in a language the consumer understands is likely to be considered misleading information under the CPRs in that the language would be unintelligible to the consumer.
In our view it is unlikely that the CPRs would also cover the requirement to provide the contract in English in Regulation 17(4). In such cases the contract would be unenforceable against the consumer.
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Q24: Is failure to comply with Regulation 18 (Translation of contract into the language of a member State in which immovable property rights in relation to which a timeshare contract is concerned is situated) a criminal offence?
Answer Q24 : Yes. Failure to comply with Regulation 18 would be an offence under the Regulations.
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Right to withdraw
Q25: Do I have to give the consumer a right to withdraw from the contract?
Answer Q25 : Yes, the consumer is entitled to a period of 14 days after the date on which the parties agree the contract during which they may withdraw from the contract at no cost.
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Q26: Does the consumer have to use the standard withdrawal form?
Answer Q26 : No – the consumer must give written notice and that can be in the form of the standard withdrawal form but this is not obligatory.
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Q27: When does the 14 day withdrawal period start?
Answer Q27 : The start of the withdrawal period is decided either by the point at which the contract is concluded (entered into) or when a copy of the concluded contract is received by the consumer, whichever is later.
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Q28: What does “conclusion of the contract” mean?
Answer Q28 : A contract is concluded when both parties have entered into it, or agreed to it and it becomes binding. In most cases in this context it will be when both the consumer and the trader sign the contract. Irrespective of being bound by a concluded contract, the Regulations provide separately that the consumer may withdraw from the contract during the withdrawal period.
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Q29: When does the withdrawal period end?
Answer Q29 : This depends. In usual circumstances it will end 14 days after the start date (where day 1 is the day after the start date). References to “days” are to calendar days, not working days.
However, if the trader has failed to provide the standard withdrawal form with the contract then the period can be extended for up to 1 year and 14 days from the start date depending on the date on which the consumer receives the withdrawal form. If the consumer receives the withdrawal form within a year from the start date the withdrawal period ends 14 days after that date.
If it transpires that the trader has failed to provide all of the relevant key information then the period can be extended for up to 3 months and 14 days from the start date. If the consumer receives the missing information within 3 months from the start date the withdrawal period ends 14 days after that date.
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Q30: What are the obligations on the trader with regard to the cancellation of a related credit agreement?
Answer Q30 : Where a consumer withdraws from a contract, any ancillary contracts, including related credit agreement are automatically cancelled. If the trader is not also the creditor under the related credit agreement, the trader must, on receipt of the notice of withdrawal from the consumer, inform the creditor that the notice has been received without delay.
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Q31: Where timeshare and exchange contracts are linked during the same sales process, does a subsequent withdrawal period apply after the withdrawal period applicable to the timeshare contract has expired?
Answer Q31 : No. The Regulations allow a single withdrawal period (that which applies to the timeshare contract) where an exchange contract is offered at the same time as a timeshare contract.
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Q32: Does the consumer still have the opportunity to contact the trader before the withdrawal period has expired and ask for the contract to be varied in some way (for example to renegotiate the price, or to seek an alteration to the weeks of occupation)?
Answer Q32 : Once a contract is concluded, whether or not the consumer has the right in legislation to then withdraw from the contract for a period, it remains open to either party to seek to renegotiate the terms. Nothing in these Regulations changes that. The intention of the Directive and our Regulations is that the pre-contractual “key information” which must have been provided in good time before the conclusion of the contract forms a part of the contract at the point of its conclusion (the point at which both parties enter into the contract). This information cannot be changed without the express permission of the consumer, or because changes are the result of unusual and unforeseeable circumstances beyond the trader’s control the consequences of which could not have been avoided even if all due care had been exercised.
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Q33: If the consumer has used the services available under the contract before they decide to withdraw within the withdrawal period, or the extended withdrawal period can I charge them for services rendered?
Answer Q33 : No, the consumer is not liable for any costs in the event that they withdraw. They should not have been asked to pay any costs related to the contract during the withdrawal period as this would amount to an offence (see question 32). Services provided by the trader before the end of the withdrawal period are, in other words, provided at the trader’s own risk.
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Payment
Q34: When can I collect payment?
Answer Q34 :
Timeshare, Long-term Holiday Product and Exchange contracts:
You must wait until the end of the period during which the consumer is entitled to withdraw from the contract. Normally, this will be 14 calendar days after the day the contract was agreed. However the withdrawal period may be extended for reasons set out in the Regulations, i.e. for up to one year and 14 days where you have failed to provide the standard withdrawal form, or for up to 3 months and 14 days if you fail to provide the key information. If in either case you provide the required form or key information within the relevant extended period the withdrawal period ends 14 days after the day on which you provide the relevant form or information.
Resale contracts:
You must wait until the consumer has sold the timeshare or long-term holiday product in respect of which you have been providing resale services, or the contract is otherwise terminated.
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Q35: Is failure to comply with Regulation 25 (Accepting payment in advance of the end of the withdrawal period) a criminal offence?
Answer Q35 : Yes. Failure to comply with Regulation 25 is an offence under the Regulations.
In respect of timeshare, long-term holiday product and exchange contracts the trader is not permitted to accept any consideration in advance of the end of the withdrawal period.
In the case of resale contracts the trader may not accept any consideration in advance the sale of the consumer’s timeshare or long-term holiday product, or until the resale contract is otherwise terminated.
- “Consideration” is a wide term and is defined as including, but not exclusively, payments, guarantees, reservations of money on account and acknowledgment of debt.
- “any consideration” would include consideration provided to a third party to be held for the trader.
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Q36: The regulations allow for payment when a resale contract is “otherwise terminated”. What does this mean?
Answer Q36 : The conditions under which the contract may be terminated must be included in the contract (this is key information). It is not unreasonable that the parties might agree, for example, that in the event that genuine attempts have been made to find a buyer for a timeshare but that no buyer has been found within a reasonable or specified period that they agree to terminate the contract. Termination of the contract relieves all the parties of any obligation under the contract, including obligations for payment in the event that the contract had been fully performed (by the sale of the timeshare). Of course it is possible that a resale contract may only have a defined time to run, irrespective of whether a sale results. In that case the consumer should be in possession of pre-contractual information and a contract which explains what the charge for that contract is and will be able to judge for themselves whether it represents good value for money, given that a sale might not result by the time it runs out. It would be for the trader to satisfy the consumer that they had made every effort to meet their obligations under the contract to show that it had been performed correctly. If not, they will have breached the contract. In any case the trader is not permitted to take any consideration in respect of the contract before it is either completed by a sale or it is otherwise terminated.
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Q37: Is failure to comply with Regulation 26 (Payment Schedule – Long Term Holiday Products) a criminal offence?
Answer Q37 : Yes. Failure to comply with Regulation 26 is an offence under the Regulations.
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Enforcement
Q38: Who can enforce these regulations?
Answer Q38 :
The regulations are enforced by Local Authority trading Standards officers. The OFT also have some enforcement powers under the Enterprise Act 2002.
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Q39: Is the obstruction of authorised officers a criminal offence?
Answer Q39 : Yes. Regulation 33 provides that the obstruction of authorised officers is an offence under the Regulations.
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Q40: What are the penalties in the event of a successful prosecution for non compliance with the Regulations?
Answer Q40 : The penalties for cases taken under the Regulations are a fine on summary conviction, currently up to £5,000, or an unlimited fine on conviction on indictment. This is in line with other sector-specific consumer protection legislation.
The penalties for cases taken under the Consumer Protection from Unfair Trading Regulations 2008, a fine on summary conviction, currently up to £5,000, or on conviction on indictment an unlimited fine or up to 2 years imprisonment.
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Q41: Regulation 34 makes provisions for Civil proceedings, what does it mean?
Answer Q41 : Regulation 34 lists specific provisions in the regulations which places the duties on traders towards consumers or to a creditor in respect of a related credit agreement. Contravention of these regulations may not only result in criminal prosecution where offences apply, but can give rise to proceedings for breach of statutory duty in the civil courts for damages. Regulation 34(4) provides that a contravention of the obligations will be actionable accordingly as the person who may bring the action will differ depending on who the duty is owed to.
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