Case law

  • Case Details
    • National ID: 340/1999
    • Member State: Spain
    • Common Name:Juan Bautista R. R. and Teresa G. M. v “Mundivac, S. A.” and “Acualandia, S. A.”
    • Decision type: Other
    • Decision date: 01/07/1999
    • Court: Audiencia Provincial (Appellate court, Castellón)
    • Subject:
    • Plaintiff:
    • Defendant:
    • Keywords:
  • Directive Articles
    Timeshare Directive, Article 5, 1. Doorstep Selling Directive, Article 1, 1. Doorstep Selling Directive, Article 5
  • Headnote
    1. Directive 97/47/EC on timeshare rights cannot be applied to events occurring before the transposition period ends for Member States. ECJ case-law on the vertical and horizontal direct effect of the directives does not sanction such an application. Nor does the Travel Vac case (ECJ judgement of 22 April 1999) allow consumers to withdraw from timesharing contracts if such contracts were not concluded by doorstep selling.
    2. For a Directive to also have a certain “horizontal” direct effect between private individuals, two pre-conditions must be satisfied: firstly, the Directive must be clear and precise i.e. it must confer identifiable rights; and secondly, there must be causal link between the State’s failure to comply with the transposition deadline and the claimant’s loss.
    3. The use of aggressive techniques to sell timeshare rights and the inclusion of a withdrawal clause stipulating a penalty in smaller print than the rest of the contract text, in a deliberate attempt to conceal this from the consumer, renders the clause null and void and may lead to the cancellation of the contract, and the nullity of the contract may also be declared in the event of an error such as a defect in consent.
  • Facts
    On the last weekend of November 1994, the plaintiffs attended a meeting at a hotel where they were offered to purchase an apartment in Peñíscola on a timeshare basis. To this end, on 26.11.1994 they signed a purchase document, which contained a footnote in print smaller much smaller than the rest of the contract text and which recognised their right to cancel the contract within seven days following the date of signature but with the obligation to pay 25% of the price to the seller as a penalty clause. On 28 November, the buyers sent a letter by certified post to the manager of the selling company, expressing their wish to withdraw from the contract on the grounds that the employee responsible for the sale had eventually convinced them to purchase the property with the option of withdrawing freely from the contact, but had made no mention of any penalties. The seller received the letter on 30 November, but did not reply. Instead, the seller subsequently claimed payment of the full amounts stipulated in the contract. The court of the first instance rejected the claim, but the appeal court revoked the judgement and after reviewing in detail the applicability of non-transposed directives, declared the nullity of the contract on the grounds of both mistaken consent and the unfair terms of the clause.
  • Legal issue
    The plaintiffs and appellants based their case on the application of the free right of withdrawal, without any penalty, of Directive 1994/47/EEC and Law 42/1998, both on timesharing. In this connection, the judgement is based on a detailed examination of the doctrine of the direct effect of the Directives and their possible application in relation to Article 5.1 of Directive 1994/47/EEC. The court recalled that the directives were not directly applicable (Judgement of the Spanish Supreme Court of 18 March 1995), although following the judgement handed down by the ECJ on 14 July 1994 (Faccini case), the clear, imprecise and unconditioned rights established by a Directive are deemed to be applicable when a State fails to implement the directives within the established transposition deadline. Nevertheless, as the aforementioned Spanish Supreme Court judgement of 18 March 1995 states, this direct effect (referred to as a “vertical” direct effect) is only applicable in the case of claims presented by citizens against non-complying States and not in relations between citizens themselves (the “horizontal” direct effect) and, as the Spanish Supreme Court judgements of 8 November 1996 and 28 November 1997 specify and the present judgement concludes, this horizontal direct effect can only be deemed to have occurred between private individuals if two pre-conditions are satisfied: the Directive must be clear and precise regarding the conference of identifiable rights and the State must have failed to implement the directive within the established transposition period.

    According to the Appeal Court of Castellón, the case-law of the Spanish Appeal Courts has gone further by ruling that these conditions are alternative, i.e. both requirements do not have to be satisfied at the same time and, instead, it is sufficient for one of the requirements to be satisfied (Judgement of the Appeal Court of Zaragoza, 4 November 1997; Judgement of the Appeal Court of Málaga, 30 June 1997; Judgement of the Appeal Court of Las Palmas de Gran Canaria, 20 July 1998). This judgement states that “to our understanding, these conclusions exceed the actual doctrine of the European Court of Justice, reflected in the judgements of 4 December 1974 (Van Duyn case), 19 January 1982 (Becker case) and 14 July 1994 (Faccini case), which establish, as a pre-condition for applicability of direct effect, that the Directive should have been transposed within the stipulated deadline or has been transposed incorrectly or incompletely. However, the judgements of 13 November 1990 (Marleasing case) and 26 February 1986 (Marshall case) indicate that when applying national law, whether the provisions concerned pre-date or post-date the directive, the national court asked to interpret national law is bound to do so in every way possible in light of the text and aim of the directive to achieve the results envisaged by it”, and thus to apply Article 189 of the Treaty.

    The Spanish judgement then reviews the Travel Vac case (ECJ judgement of 22 April 1999), which rules on the right of consumers to cancel timeshare contracts without incurring any expenses in application of Directive 85/577/EEC on doorstep selling. This Spanish judgement states as follows: “If the ECJ had considered Directive 94/47 to be directly applicable at the time, and which also established unilateral withdrawal (Article 5.1), it would have indicated this in the aforementioned judgement, making this matter simply a question of directly applying the Directive on timeshare rights, without deeming the contract as one negotiated away from commercial premises. And it did not do so. For this reason, the ECJ considers that Directive 94/47 has no direct effect on contracts concluded during the period of transposition of directives to national law. In this case, the contract was concluded on 26 November 1994, and the Directive had only been in force for one month, i.e. there were still 29 months to go before the transposition period expired”. This is why the right of withdrawal established in the Directive cannot be applied.

    Nevertheless, the Spanish court eventually acknowledged the consumer’s demands via another procedure, since the plaintiff requested the nullity of the contract. The court considered that the seller had acted in bad faith (dolus) by concealing the withdrawal penalty, hence the contracting parties had committed a defect in consent rendering the contract voidable as provided by the general provisions of the Civil Code (Articles 1265, 1269 and 1300). In this connection, the court supported its decision by describing this sales technique as aggressive (see SAP Zarazoza –Judgement of Appeal Court of Zaragoza–, 4 November 1997), which explains the legal grounds for the withdrawal right awarded by the Directive and the Law on timesharing, which are not applied here.

    The judgement also considered that the clause establishing the withdrawal right with a penalty of 25% of the price was unfair, in accordance with the General Consumer Protection Law (Article 10 of Law 26/1984). Moreover, the consumer’s right to withdraw from the contract may be justified in three ways: first, because the entire clause is null and void and this means that, pursuant to Article 10.4 of Law 26/1984, when the other valid clauses give rise to a situation that is deemed to be unfair, the entire contract will be invalid; secondly, because only the withdrawal penalty is null and void and therefore the consumer may withdraw from the contract without incurring any expense, in conformity with the contract modified accordingly; and thirdly, on the grounds of the circumstance rendering the contract voidable due to an error in the fundamental condition of the contract which induced the plaintiff to sign it, rendering the contract null and void (Article 1269 of the Civil Code).
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