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Recently we forwarded you information on the National Consumer Commission who were investigating, implementing court proceedings against holiday clubs selling points.
A further article has appeared in the independent on Saturday 16th of May edition and we will be briefly commenting on this in three articles, this being the first. The National Consumer Commissions main concerns are with the lifetime contracts or in perpetuity contracts, the legality of points in general and the sales tactics adopted by these clubs to sell these points. The regulator has taken its case against Univision which is the holding company of Quality Vacation Club to the National Consumer Tribunal and has said that it also intends to act against Club Leisure Group which owns Flexi Club.
The clubs generally have reacted by offering to convert memberships in their clubs and Flexi Club is currently offering a select club membership designed especially for pensioners. This membership costs an additional R1750 but once paid, according to the club, this would reduce levies down to R475 a year.
Contracts of this nature would not apparently automatically be passed onto the heirs of a club member when he or she dies which may be attractive to certain club members who have not been able to cancel their membership in the past as this has always been in perpetuity with clubs, which has been cause for much unhappiness.
Whilst the question being asked by club members is, should they accept this offer whilst awaiting the result of the case against the clubs by the NCC. Mr Steven Logan an attorney specialising in consumer law says that one should not necessarily wait for the tribunal as there is no knowing what decision they may decide upon. He goes onto say however that consumers should not believe they are trapped and should cancel unlawful contracts on the basis set out in the Consumer Protection Act (CPA). Consumers should understand they have the right to cancel fixed term contracts and indefinite-period contracts. The act provides that the maximum period for a fixed term agreement is 24 months. Any contract longer than this period has to be proved to be of financial benefit to the consumer or a court will not enforce such a longer period. The onus would be upon the Holiday Club to prove this benefit to the consumer. The Consumer Protection Act also allows the consumer to cancel any fixed term contract by giving the service provider twenty days notice in writing.
Whilst the act allows for a reasonable cancellation fee to be charged, it does state that this fee cannot be so high as to negate a right to cancel. Steven Logan goes on to further advice that the clubs in offering to convert lifetime contracts to fixed term contracts are most likely trying to preserve their membership because they know it is likely that a court will agree with the National Consumer Council that their contracts are unlawful. If these contracts are proven to be against public policy, they may well be void or voidable and consumers who have entered into such contracts may even have a right to claim damages against the Holiday Club in question. He goes onto say that you should be careful not to simply convert from one unlawful contract to another.
We believe we are living in interesting times especially when it comes to the holiday clubs that have been a part of the industry for so many years and who have been peddling possibly unlawful contracts to an unsuspecting audience who have subsequently found that the obtaining of holidays against points purchased is difficult at best and often impossible .
It will be interesting to see the result of any legal confrontation between the National Consumer Commission and the holiday clubs if this comes to court. In the meantime we continue to rent and sell in real right schemes in which one owns a share in a shareblock company or a sectional title scheme. This enables you to vote at meetings of the company and also gives you the right of use which is linked to a specific property and time.