What is a Contract?
In common law legal systems (of which the UK is one), a contract expressed as an agreement having lawful effect if entered into voluntarily by two or more persons/parties, each of whom wants to and intends to create one or more binding legal obligations between them.
The elements of a contract are quite simple and in 3 stages
- An offer
- An acceptance
- The exchange of a “consideration” for a corresponding benefit
These can be achieved in writing, or indeed by the party’s conduct.
If the contract is broken by one party, a remedy may be required for “breach” - either compensation or specific performance, dealt with through an injunction.
The parties may be natural persons or not (i.e. a company).
A contract is either a legally enforceable promise or undertaking that something will or will not happen.
The word promise can be used as a legal synonym for the contract, although care is required, as a promise may not have the full standing as a contract, or when an agreement does not have consideration.
Contract law is based on the principle “agreements must be kept” but more literally means “pacts which must be kept”.
Jurisdictions vary in their principles of freedom of contract, although in common law jurisdictions such as the United Kingdom, a high degree of freedom is expected.
Not all agreements are necessarily contractual, as the parties generally must have an intention to be legally bound (or the functional equivalent under the objective theory of contracts).
In England, the term gentlemen’s agreement is one which is not intended to be legally enforceable; “binding in honour only.”
At the core of any relationship between a timeshare company, owners club and the owner of the timeshare themselves, there is a contract. When a party to that contract wholeheartedly believes that another party to the contract is acting in a manner which appears unfair, it’s that contract which the parties to the agreement should look to, to refresh themselves as to the bargain they struck, intended to strike or believed had been struck. Then a consumer will understand if there exists a divergence from what was expected.
It is these terms, conditions and obligations contained in the contract which one should refer to to begin the investigation as to the rights, or purported rights, each party has.
Offer and acceptance
For a contract to be formed, parties to the contract must reach mutual assent (this is called a meeting of the minds). This is typically reached through the offer and an acceptance. It does not vary the offer’s terms, therefore, it is known as the "mirror image rule".
If an acceptance varies the terms of the offer, it is not an acceptance of the offer, but a counter offer and therefore, simultaneously a vacation of the original offer.
As a court cannot read minds, the intent of the parties is interpreted objectively from the perspective of a reasonable person.
Contracts involving timeshare are generally bilateral contracts.
Consideration is something of value given by a promissory to a promisee in exchange for something of value given by a promisee to a promissory.
Scottish law-based systems do not require consideration, and some commentators have suggested that consideration is abandoned, and estoppels are used to replace it as a basis for contracts.
Courts will typically not weigh the “adequacy” of consideration if the consideration is determined to be “sufficient”, with sufficiency defined as meeting the test of law, whereas “adequacy” is the subjective fairness or equivalence.
A party must have the capacity to enter a contract. That means parties in a contract must justify their age to establish an understanding as to the terms of the contract, further they must be mentally able to understand the implications of entering into the contract.
The purpose of the contract must be lawful, the form of the contract must be legal, the parties must intend to create a legal relationship, finally, the parties must consent.
As a result, there are a variety of affirmative defences that a party may assert to avoid their obligation.
Vitiating factors constituting defences to purported contract formation include:
- Mistake such as non-est factum
- Incapacity, including mental incompetence and infancy/minority
- Undue influence
- Misrepresentation or fraud
- Frustration of purpose
Such defences operate to determine whether a purported contract is either void or voidable. Void contracts cannot be ratified by either party. Voidable contracts can be ratified.
The aforementioned are therefore the common and basic positions to be explored to challenge the assertions of a timeshare contract. It is not necessary to wait to be pursued by a rimeshare company; any party to a contract can ask the courts for a determination as to the contract they entered into.