Timeshare Contract Law


Formalities and writing

Typically, contracts are oral or written, but written contracts have typically been preferred in common law legal systems in respect to timeshare; in 1677 England passed the Statute of Frauds.

If the contract is not required by law to be written, an oral contract is valid and therefore legally binding.

If a contract is in a written form, and somebody signs it, then the signatory is typically bound by its terms regardless of whether they have read it, provided the document is contractual in nature. However, affirmative defences such as duress or unconscionability may enable the signer to avoid the obligation(s). Further, reasonable notice of a contract’s terms must be given to the other party prior to their entry into the contract.


Invitation to treat

Where a product in large quantities is advertised in a newspaper or on a poster, it generally is not considered an offer but instead will be regarded as an invitation to treat, since there is no guarantee that the store can provide the item for everyone who might want one. However, an exception to this rule may be made if an advertisement includes a reward, which is what happened in the famous case of Carlill v. Carbolic Smoke Ball Company, decided in nineteenth-century England
Performance varies according to the circumstances. While a contract is being performed, it is called an executory contract, and when it is completed it is an executed contract. In some cases, there may be substantial performance but not a complete performance, which allows the performing party to be partially compensated.


Uncertainty, incompleteness and severance

If the terms of the contract are uncertain or incomplete, the parties cannot have reached an agreement in the eyes of the law. An agreement to agree does not constitute a contract, and an inability to agree on key issues, which may include such things as price or safety, may cause the entire contract to fail. However, a court will attempt to give effect to commercial contracts where possible, by construing a reasonable construction of the contract.

Courts may also look to external standards, which are either mentioned explicitly in the contract or implied by common practice in a certain industry. In addition, the court may also imply a term. If there are uncertain or incomplete clauses in the contract and all options in resolving its true meaning have failed. It may, of course, be possible to sever and void just those affected clauses if the contract includes a severability clause. The test of whether a clause is severable is an objective test (whether a reasonable person would see the contract standing even without the clauses.

In respect to timeshare, some companies are, in short, making up terms and conditions, as the original contracts are silent as to the terms which are required to provide those timeshare companies with benefit, comfort etc.

Such introductions of terms unilaterally will be deemed unfair unless the construction of the contract in respect to its workability is ineffective without them.

The implementer of additional terms will have to show that they are not being enriched; the term does not frustrate the contract or deprive the other party of rights which they enjoy in the contract.

It is always difficult for the author of a contract to add in new terms which seek to benefit them without firstly enriching the other party for the rights they have lost or have perceived to have lost.

It’s always good practice to listen to what the implementer of a new term is saying and applying for a testing benefit before a challenge.


Classification of terms

Contractual terms are classified differently depending on the context or jurisdiction. Terms establish conditions precedent. English common law distinguishes between important conditions and warranties, with a breach of a condition by one party allowing the other to repudiate and be discharged while a warranty allows for remedies and damages but not complete discharge. Whether or not a term is a condition is determined in part by the parties’ intent. In a less technical sense, however, a condition is a generic term and a warranty is a promise. Not all language in the contract is determined to be a contractual term.

Representations, which are often pre-contractual, are typically less strictly enforced than terms, and material misrepresentations historically was a cause of action for the tort of deceit. Statements of opinion may be viewed as “mere puff”.

In specific circumstances, these terms are used differently. In the United Kingdom, the courts determine whether a term is a condition or warranty.


Representations v Warranties

Statements of fact in a contract or in obtaining the contract are either warranties or representations. Traditionally, warranties are factual promises which are enforced through a contract legal action, regardless of materiality, intent, or reliance.

Representations are traditionally precontractual statements which allow for a tort-based action (such as the tort of deceit) if the misrepresentation is negligent or fraudulent; historically a tort was the only action available, but by 1778, breach of warranty became a separate legal contractual action.

In modern English law, sellers often avoid using the term ‘represents’ in order to avoid claims under the Misrepresentation Act 1967. Statements in a contract may not be upheld if the court finds that the statements are subjective or promotional puffery. English courts may weigh the emphasis or relative knowledge in determining whether a statement is enforceable as part of the contract.


Implied terms

A term may either be express or implied. An express term is stated by the parties during negotiation or written in a contractual document. Implied terms are not stated but nevertheless form a provision of the contract.


Terms implied in fact

Terms may be implied due to the factual circumstances or conduct of the parties. In the Australian case of BP Refinery Westernport v. Shire of Hastings, the UK Privy Council proposed a five-stage test to determine situations where the facts of a case may imply terms. The classic tests have been the “business efficacy test” and the “officious bystander test”. Under the “business efficacy test” first proposed in The Moorcock [1889], the minimum terms necessary to give business efficacy to the contract will be implied. Under the officious bystander test (named in Southern Foundries (1926) Ltd v Shirlaw [1940] but actually originating in Reigate v. Union Manufacturing Co (Ramsbottom) Ltd [1918]), a term can only be implied in fact if an “officious bystander” listening to the contract negotiations suggested that the term be included the parties would promptly agree. The difference between these tests is questionable.


Terms implied in law

In the United Kingdom, implied terms are created by the Sale of Goods Act 1979, the Consumer Protection (Distance Selling) Regulations 2000 and the Supply of Goods and Services Act 1982.



Misrepresentation means a false statement of fact made by one party to another party and has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation. A finding of misrepresentation allows for a remedy of rescission and sometimes damages depending on the type of misrepresentation.

There are two types of misrepresentation: fraud in the factum and fraud in the inducement. Fraud in the factum focuses on whether the party alleging misrepresentation knew they were creating a contract. If the party did not know that they were entering into a contract, there is no meeting of the minds, and the contract is void. Fraud in inducement focuses on misrepresentation attempting to get the party to enter into the contract. Misrepresentation of a material fact (if the party knew the truth, which party would not have entered into the contract) makes a contract voidable.



A mistake is an incorrect understanding by one or more parties to a contract and may be used as grounds to invalidate the agreement. Common law has identified three different types of mistake in contract: common mistake, mutual mistake, and unilateral mistake.


Duress and undue influence

Duress has been defined as a “threat of harm made to compel a person to do something against his or her will or judgment; esp., a wrongful threat made by one person to compel a manifestation of seeming assent by another person to a transaction without real volition.”


Sometimes the capacity of either natural or artificial persons to either enforce contracts or have contracts enforced against them is restricted. For instance, very small children may not be held to bargains they have made, on the assumption that they lack the maturity to understand what they are doing; errant employees or directors may be prevented from contracting with their company because they have acted ultra vires (beyond their power). Another example might be people who are mentally incapacitated, either by disability or drunkenness (did the seller ply you with. In these cases, the contract is either void or voidable.


Illegal contracts

If based on an illegal purpose or contrary to public policy, a contract is void.


Breach of contract

Breach of contract is defined in the Unfair Contract Terms Act 1977 as non-performance, poor performance, part-performance, or performance which is substantially different from what was reasonably expected when the contract was agreed.

Innocent parties may repudiate (cancel) the contract only for a major breach (breach of condition), but they may always recover compensatory damages, provided that the breach has caused foreseeable loss.