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Freddie Lombard
Freddie Lombard, Attorney
Category: South Africa Law
Satisfied Customers: 2681
Experience:  Practicing attorney and conveyancer with 16 years post article experience.
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Morning. We bought QVC points in 1998 and paid cash .

Customer Question

Morning. We bought QVC points in 1998 and paid cash for them. the units were purchased in the name of a Trust. the membership fee has been paid for annually. 2015 is in arrears as the Trust is closing down. The Master is aware that the Trust is in the final throws of being closed down. I have let QVC know that the Trust is closing down. They are now insisting that they will go after the Trustee who signed the original contract in 1998 on behalf of the Trust. That particular person resigned as a Trustee a number of years ago. The two remaining Trustees are not interested in taking over the club points or in continuing to pay the annual membership fees. What stance can we take?
Submitted: 2 years ago.
Category: South Africa Law
Expert:  Freddie Lombard replied 2 years ago.
Good morning,
Thank you for your question. I will try to assist you in answering it today but please feel free to ask as many follow up questions as you like until you are 100% satisfied.
That would all depend on the contract, and whether the trustee bound himself as co-principal debtor an surety for the trust.
The first port of call would be to obtain a copy of the signed contract from QVC. But, cancelling these contracts are not all that easy. If the trustee bound himself, he may be stuck with the contract irrespective of whether he has resigned as a trustee or not. So, he will have to take the following advice.
The current situation is unclear, and has not been tested in a Court. The Consumer Protection Act (CPA) makes provision for the cancellation of fixed term contracts in certain circumstances, and under certain conditions. The problem with these time share agreements is that they are not fixed term contracts and they are in fact contracts that are binding in perpetuity.
The effect of this is that the CPA is not specifically applicable to them.
And, the only manner to cancel these type of agreements is BY AGREEMENT between the parties, and from my experience, the provider will only consider a request for cancellation in the event that the consumer is up to date with all their payments due for the points, levies and other charges. Even then, the consumer can only request cancellation, and the provider can, in terms of the contract and constitution of the company refuse such a request.
To cancel the agreement due to (for instance) the non performance of the provider, is very difficult, because the small print basically absolves them from any responsibility - they NEVER guarantee that accommodation at the chosen resort will be available for instance.
The long and short of it is, that a Court will always give preference to rather enforcing a contract than to cancelling it. This is mainly due to the fact that the Courts do not want to create any uncertainty in the law, and once contracts become "cancellable at the whim of a party" the law will become completely uncertain. The fact is that when the contract was signed, it was by agreement, and it is therefore accepted that the parties accepted the terms and wanted to enter into the agreement, and that they understood the contents and consequences.
In other words, the courts will not lightly involve itself with the contract and unless it can be shown that the contract is illegal or against the public interest, they will allow people to freely contract with one another
I hope this answered your question.
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Regards
Customer: replied 2 years ago.
Thank you for your answer. I have a copy of the Purchase Agreement that was signed at that time. The contract refers to the payment of the purchase price for the units, not to the ongoing membership fees payable annually. in fact it is uncertain as to why a contunuing membership of such a high amount is payable annually. Levies in a real asset such as a physical week owned in a timeshare resort is required to maintain the physical asset. But what the membership of QVC is for, is largely unknown. The Purchase agreement makes reference to breach clauses. These clauses specifically only relate to the purchase price of the club units that may be in arrears, not to the membership fees (where the purchase price was financed over a number of months with interest) The breach clause states that they may enforce the purchase agreement or cancel the agreement. The Trust is effectively in breach. But they cannot enforce the contract since the purchase price has been paid in full back in 1998 and was not financed at all.In addition, I do believe that clause 14 of the CPA does apply even though this contract was signed before the implementation of the Act. In other words I am led to understand that these "ïn perpetuity" contracts by timeshare companies, were automatically, after implementation of the CPA, allowed to run for a maximum of two years as they stood, thereafter they needed to be renegotiated. Is this the case?In terms of the co -debtor, not one for the Trustees signed for surety in the Trust. Also if QVC are waiting to go this route, then they need to go after ALL the Trustees at that time?
Expert:  Freddie Lombard replied 2 years ago.
No, it is not correct. Section 14 of the CPA is limited to "fixed term contracts"and does not cover perpetual agreements.
I can unfortunately not comment on the balance of the contract as I have not read it. I do know that all of these timeshare schemes have annual levies and fees that must be paid and that is how they make their money.
In your case, either there must be a clause in the contract, or there is another separate agreement on which they base their claim.
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