Don’t get sucked in!

I act for a client who signed up with a company operates a holiday scheme.  The way this scheme works is that members of the scheme (the term given to customers) pay a series of charges and buy points which they are theoretically able to bank and trade for holidays.  Different holidays are worth different amounts of points.  It is similar to timeshare except it is not a timeshare scheme.

My client came to me because of a series of misrepresentations which have been made to my client by representatives of this company about how the scheme works and when he could reap the benefits of his “investment”.  The basic sequence of events is as follows:

• my client was approached by this company and invited to a day in a holiday town nearby together with his family and his chequebook;
• at the event he and his wife (they were both required to be there) were told about the scheme and how they could take their family on holidays that were far better than the one they intended going on in about two weeks after the event;
• my client found the whole proposition attractive and paid the deposit he was asked to pay;
• he also agreed to pay for a certain number of points;
• a few days before he and his family were due to leave for their spectacular holiday promised by the company, my client was informed that he had to pay an annual levy in addition to the amounts he paid already, which he did;
• unfortunately the company failed to deliver on its promises and my client was informed that he did not have sufficient points to go on a basic holiday;
• my client was forced to wait until the following Easter at which time he attempted to arrange the holiday he wasn’t able to take his family on the previous year and was given another story and told he needed to buy more points.

This went on an on with the end result that my client wound up paying a considerable amount of money and was ultimately informed he and his family would only be able to go on a holiday through the scheme after three years (interesting time period because civil claims generally fall away after three years) and only if he remained up to date with his monthly payments, the annual levies and bought sufficient points to afford these holidays.  I believe an average holiday costs between 400 and 700 points at a cost of anything from R100 per point.

When it came to looking at the contract to ascertain what everyone’s obligations are, I found that the contract comprised two cryptically drafted documents that really don’t do much except deal with certain structural issues pertaining to the scheme itself.  The documents do not clearly set out what the requirements are to take a holiday and they don’t deal with how a member ceases to be come a member.  In fact, the only thing the documents are clear about is what happens in the event of a breach.

To add insult to injury, the company is based in this nearby town and this makes the logistics of litigation that much more cumbersome.  The company also uses an acknowledgement of debt to tie members down with specific provisions attempting to confer jurisdiction on the local Magistrates Court (an invalid provision).  The end result is that the most cost effective solution may be to simply pay the outstanding amount and cancel the contract with the company (something they are willing to do if the member is paid up).  The lesson of this sad story is that it is imperative that you know what you are signing when you sign it.  Don’t be taken in by fanciful deals and wild promises of holidays or opportunities beyond your expectations.  Often those representations are specifically excluded from the terms of the contract in an effort to prevent you from relying on them.  If it seems too good to be true, it probably is.  If, when you read the documents comprising the contract, you are not 100% clear on what your and the company’s obligations are, then rather step away or have your attorney review the documents before you sign them.

Technorati Tags: misrepresentations, unclear contracts