C-423/97

1. In this reference for a preliminary ruling, the Juzgado de Primera Instancia N o 22 de Valencia (Court of First Instance N o 22, 3. As is evident from the contract submitted Valencia) has referred to the Court questions by the national court, the property in ques- concerning the applicability of Council Direc­ tion was a 1/51 ownership share in an apart- tive 85/577/EEC of 20 December 1985 to ment in a holiday complex in Denia, granting protect the consumer in respect of contracts an exclusive right of enjoyment during the negotiated away from business premises 1 to 19th week of each year. The ownership of the a time-share contract concluded in a holiday apartment was thus regarded as being divided complex in Denia — located 100 km from into 51 shares, each of these shares conferring Valencia — at the invitation of a company a right of use during a certain week of the having its seat in Valencia. year, with the rest of the year (that is to say, week 52) being set aside for maintenance. Under the terms of the contract, the balance (that is to say, the total price less the value of the immovable property) included value added tax, time-share rights to furniture and affili- ation to R. C. I. (Resorts Condominium Inter- national). As a member of that organisation, 2. According to the court referring the ques­ a time-share owner could exchange his respec- tions for a preliminary ruling, the contract tive time-share and use all the shared facili- made on 14 September 1996 between Travel ties of the complex. Vac, S. L. (hereinafter 'Travel Vac') and a con­ sumer, Mr Manuel José Antelm Sanchís, cov- ered rights to use immovable property on a time-share basis as well as services and other purely contractual obligations. At the invita- tion of Travel Vac — a company having its 4. The contract further provided that, in the place of business in Valencia — the consumer event of failure to pay on the due date, com- pensation in the amount of 25% of the total value of the transaction plus interest inter alia * Original language: German. would become payable. This sum would be 1 — OJ 1985 L 372, p. 31. payable even if the consumer had, in a binding

(1) Are time-share contracts generally, and the contract at issue in the present case (page 76 in the case-file) in particular, to be regarded as falling within the scope of Article 3(2)(a) of Directive 85/577/EEC, 7. The national court points out that Direc- which contains provisions excluding the tive 94/47/EC of the European Parliament application of that directive? and the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a time-share basis 2 (hereinafter 'Directive 94/47') does not apply to the present case, as (2) Even if, by virtue of that article, the con- it provides for a transposition period of 30 tract at issue in the present case, being a months, so that it would only have had to be time-share contract, is excluded from the application of that directive, could such exclusion be precluded by the fact that 2 — OJ 1994 L 280, p. 83. the contract is not concerned solely with

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immovable property but also involves the forms part of any contract (Articles 1254, provision of services and other matters 1258, 1261 et seq. of the Spanish Civil relating exclusively to the fulfilment of Code)? obligations (clause 3) which account for the greater part of the consideration pay­ able (inasmuch as the value of the immov­ able property itself amounts to ESP 285 000 out of the total contract value of ESP 1 090 000)?

(4) Is the right of renunciation granted to the consumer by Article 5(1) of the directive based on a presumption that the exercise of his free will has been affected or manip- ulated as a result of the circumstances (6) Are the provisions of Article 7 of the referred to in Article 1 of the directive; if directive concerning repayments, return so, to what extent does that right of of goods and other effects arising in favour renunciation, as guaranteed by the direc- of the vendor upon the exercise by the tive, arise from the deliberate deceit on consumer of his right of renunciation the part of the vendor in using, as one of pursuant to Article 5 compatible with a the contracting parties, 'false pretences stipulation to pay 'compensation for which induce the other to enter into a damage caused to the vendor' in the form contract which would not otherwise have of a lump sum quantified at 25% of the been concluded' (Article 1269 of the total price of the transaction, as laid down Spanish Civil Code) and, generally, from in clause 4 of the contract (on the reverse the freely given consent which necessarily of page 76 in the case-file)?

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The relevant European Community legisla- 11. The consumer's right of renunciation — tion also mentioned in the questions referred — is governed by Article 5:

9. Article 1(1) of Directive 85/577 provides that the directive is to apply to 'contracts under which a trader supplies goods or ser- ' 1 . The consumer shall have the right to vices to a consumer and which are concluded: renounce the effects of his undertaking by sending notice within a period of not less than seven days from receipt by the consumer of the notice referred to in Article 4, in accordance with the procedure laid down by national law. It shall be sufficient if the notice — during an excursion organised by the trader is dispatched before the end of such period. away from his business premises, or

Observations of the parties 15. The Spanish Government considers that it is not quite clear from the contract itself whether the vendor in the contract is Travel Vac or a company having its place of business in Denia. It is very likely, according to the Spanish Government, that the contract was concluded in a room arranged by the vendor 13. Travel Vac, the plaintiff in the original for the purposes of marketing its product in proceedings, considers that the contract at close proximity to the holiday complex. If issue here does not fall within the scope of one takes into account this material factor, application of Council Directive 85/577. In there can be no doubt that the contract was support of this view, it refers to deliberations concluded on the trader's business premises. within the Commission. O n the question The Spanish Government nevertheless con­ whether or not the directive should apply to siders that Directive 85/577 is applicable, as it immovable property and rights in immovable also aims to provide protection in cases where property, it was clear that time-share con­ the consumer is induced to attend the busi­ tracts and multiple ownership did not fall ness premises of the trader in order to con­ within the scope of the directive. In order to clude the contract there. introduce specific rules for time-sharing activi­ ties, Council Directive 94/47 was adopted. It is not applicable in this case, however since at the relevant time it had not been transposed into national law and did not need to be. Travel Vac thus does not comment on the remaining questions referred to the Court.

17. The first three questions referred by the national court concern the applicability of Directive 85/577 to the present case and in particular to the contract concluded in the present case. 20. This argument must be accepted. Both directives are concerned primarily with the protection of consumers, as is evident from the titles of the directives themselves. Recital 8 in the preamble to Directive 94/47 pro­ vides, moreover: '... in order to give pur­ Questions 1 and 2 chasers a high level of protection and in view of the specific characteristics of systems for using immovable properties on a time-share basis, contracts for the purchase of the right to use one or more immovable properties on a time-share basis must include certain min­ imal items'. According to Article 1, the pur­ pose of this directive is to 'approximate the 18. These concern the question whether the laws, regulations and administrative provi­ contract at issue in the present case is covered sions of the Member States on the protection by the exclusions provided for by the direc­ of purchasers in respect of certain aspects of tive and therefore does not come within the contracts relating directly or indirectly to the scope of application of the directive. As men­ purchase of the right to use one or more tioned above, a directive on the protection of immovable properties on a time-share basis.' purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a time-share basis was adopted in 1994. It may thus be doubtful, given the existence of this directive, whether Directive 85/577 on doorstep sales nevertheless applies to the present contract, being a contract concerning the right to use 21. Directive 94/47 is thus intended to pro­ immovable property on a time-share basis. It tect a consumer who purchases rights to use must be borne in mind here that at the time immovable properties on a time-share basis. of conclusion of the contract Directive 94/47 Directive 85/577, on the other hand, affords had not yet been incorporated into Spanish the consumer protection not primarily because law, nor had the deadline for its incorpora­ he purchases certain goods but because of the tion expired. It is therefore evident, and undis­ way in which the goods are purchased or the puted, that Directive 94/47 does not apply to contract concluded. It applies, in particular, the contract now in question. to contracts concluded away from the

22. The present case concerns a contract relating to rights to use immovable proper­ ties on a time-share basis. The consumer should thus enjoy a certain degree of protec­ 24. The plaintiff further cites the different tion. Should this contract also satisfy the time periods which the directives allow the requirements of Directive 85/577, however consumer to consider whether to renounce (in other words, should it be a contract con­ the contract. The plaintiff considers that this cluded away from business premises), this too is to the consumer's disadvantage. The logic would call for a certain level of protection for of this argument is not quite evident. The fact the consumer concluding the contract. Thus, that the basic principles of two directives in the present case, the consumer would which confer a certain degree of protection qualify for protection on the basis of both on the consumer might both be applicable to situations — involving a time-share contract a particular contract cannot result in the con­ and a doorstep contract — which are here sumer being denied all protection. Should combined. The fact that the time-share con­ both directives apply, at most a decision would tract may have been concluded away from need to be made as to which of the two applies business premises as' defined in Directive to the given facts. Since, however, it is common 85/577 makes the consumer even more in ground that Directive 94/47 does not apply, need of protection and therefore all the more the latter question does not fall to be decided worthy of protection. in the present case.

of at least seven days, while Directive 94/47 of deliberations within the Commission. The allows ten days. 5 In this context, it must also wording of Article 3(2)(a) is quite general. be pointed out that both directives only pro- Whether it is supposed to include time-share vide for a minimum level of protection for contracts, in particular, is not evident from consumers, so that the Member States could the directive itself. Rather, one needs to very well provide for longer periods. 6 Direc- examine the features of the time-share con- tive 85/577 thus provides that consumers must tract in order to determine whether that form enjoy at least a minimum level of protection of contract falls within the provisions of in the case of doorstep sales. This cannot be Article 3(2)(a). This is all the more true as denied the consumer on the ground that he so-called 'time-share contracts' are not con- cannot yet enforce a right to protection pro- tracts whose features can be clearly defined. vided for by another directive. Directive 94/47 itself draws attention to the fact that the directive is designed to regulate neither 'the extent to which contracts for the use of one or more immovable properties on a timeshare basis may be concluded in Member States [nor] the legal basis for such con- tracts'. 7 Thus, the question of whether or not Directive 85/577 applies to time-share con- tracts will depend, according to the provi- sions of Article 3(2)(a) of the directive, on the 26. Moreover, neither of the directives con- features of the relevant contract. tains any provision expressly excluding the applicability of the other directive. Further- more, Directive 94/47 contains no provisions covering time-share contracts concluded away from business premises. N o r does the direc- tive on doorstep sales expressly provide that it does not apply to time-share contracts.

29. According to the court referring the ques­ tions, the contract at issue in the present pro­ ceedings concerns not only rights to use immovable properties on a time-share basis, but also services and other purely contractual obligations, whose value is higher than that of 32. The defendant goes one step further and the immovable property rights. The contract submits that time-share contracts generally is to be considered and characterised as a relate only to services. Their object is to whole, although attention should be paid to enable immovable property to be enjoyed the effect of the different elements. One could through services rendered by its owner or by thus exclude the contract altogether from the the trader. The latter draws up appropriate scope of Directive 85/577 on the grounds that schedules, permits the use of the apartment, it confers rights to use immovable property and maintains and furnishes it. Furthermore, on a time-share basis. The legal nature of such continues the defendant, time-share contracts time-share rights is determined by the Member do not relate to the use of a single property States and can differ very widely from one but to the use of several properties. The con­ Member State to another. 9 It is fair to assume, clusion of such a contract is more like joining however, that they are at least 'other rights to a club by acquiring a share. Again, it has to immovable property' within the meaning of be remembered that it is not time-share con­ Article 3(2)(a) of Directive 85/577. The Spanish tracts in general which are at issue here, but Government, incidentally, has also adopted the contract in point in the present case. this classification.

application of a Community directive. As can be answered in the affirmative in the previously stated, the interpretation and form present case. Whether this can also be said for of time-share contracts under national law the other aspects must be determined by the may vary from one Member State to another national court in the light of the circumstances and differences in application of Directive of the case. 85/577 would thus result. This would conflict with the aim of the directive, which is pre- cisely to approximate the different rules of the Member States. 10Moreover, it should also be noted that the terms of the contract under- lying the judgment cited by the defendant are not known. Furthermore, even the definition of contracts relating to the acquisition of 36. Given that, in financial terms at least, the time-share rights which is given in Directive services and other contractual obligations 94/47 assumes that 'a real property right or under the contract at issue in the present case any other right relating to the use' of one or predominate, it can be assumed that the more immovable properties is established or contract is not excluded from the scope of is the subject of a transfer or an undertaking Directive 85/577 by Article 3(2)(a). to transfer. 11

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case, these requirements are probably not sat­ on behalf of a Swiss company having a branch isfied either. in Denia, Spain. O n the other hand, the con- tract was concluded using one of Travel Vac's standard forms and was also signed for and on behalf of Travel Vac.

38. It must therefore be concluded that the contract at issue in the present case is not excluded from the scope of application of Directive 85/577 by virtue of Article 3(2). 41. The national court, which ultimately must examine this question, refers in its order requesting a preliminary ruling to a contract concluded between the parties. The parties in the main proceedings are named as Travel Vac Question 3 and the consumer. Moreover, given that in Question 3 relating to Article 1(1), Travel Vac's place of business is mentioned, it can probably be assumed that the contract was concluded between the defendant in the main proceedings and Travel Vac.

39. The national court has narrowed the ques­ tion down to asking whether the holiday complex comes within Article 1(1), first indent, of Directive 85/577. It is appropriate at this point, however, to examine the whole of Article 1(1), first indent, in order to deter­ 42. The latter is incontestably a trader for the mine whether the contract at issue in the purposes of the directive. As mentioned above, present case meets all the requirements for the contract concluded by Travel Vac relates, coming within the scope of this directive. inter alia, to the provision of services.

40. To do so, it must be a contract concluded away from business premises between a trader 43. As regards the other contracting party, who supplies goods or provides services and namely the defendant in the main proceed- a consumer. In this context, the Spanish Gov­ ings, the national court provides no further ernment raises the question who actually con­ details. One can assume, however, that he is cluded the contract as vendor. It is true that, incontestably considered to be a consumer in addition to the defendant in the main pro­ within the meaning of the directive. H o w - ceedings, the other party named in the con­ ever, this point must ultimately be determined tract is José Francisco Laparra Esteilés, acting by the national court.

48. If we now consider the protective aim of Directive 85/577, as described in the fourth recital in the preamble, 12 it can be concluded that it is clearly the trader who took the ini- tiative in the contract negotiations. The fourth 46. The defendant rightly points out in this recital in the preamble goes on to refer to a context that the date, time and venue, or surprise element which exists where the con- rather the intended destination of the excur- sumer is unprepared for the contract negotia- sion, were fixed by the trader. The consumer tions. It is not clear from the facts provided had to comply with these instructions; the by the national court to what extent the con- time of the meeting was not agreed or dis- sumer was aware of the programme for the cussed between the parties. The event which planned sales event. Accordingly, it is for the took place in Denia was also organised by the national court to examine whether there was trader. Thus, the only thing which Travel Vac a necessary surprise element in the contract- did not organise was the drive to Denia. ual negotiations. What one can say from the information before the Court is that this was not an ordinary appointment for a customer meeting, especially as the sales event itself was not in the forefront, given that mere attendance was to be rewarded by a gift.

47. The Commission further points out that the pleadings of the consumer show (and 12 — See point 21.

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Question 4

51. It can therefore be concluded that the 52. The justification for the right of renun­ contract was not signed in the context of a ciation conferred by Article 5(1) of Directive normal meeting with a client in an office, but, 85/577 is set out in the fourth and fifth recitals according to the information before the Court, in an atmosphere in which it was impossible to reflect calmly about concluding a contract. As the consumer was probably not informed 13 — Judgment in Case C-45/96 Bayerische Hypotheken- und Wechselbank ν Edgar Dietzinger [1998] ECR I-1199, at of this in advance, it can be assumed that the paragraph 19.

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56. The Commission rightly points out in this regard that it is for the national court to determine that the requirements set out in 54. As regards the national court's reference national law are fulfilled. The sanctions to provisions of national law, it must be attached to these criteria by national law may be applied cumulatively, in addition to the right of renunciation conferred by the 14 — Fifth recital in the preamble. directive.

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for non-performance. Such 'damages' would provided must, naturally, be returned. This is be tantamount to a penalty for renunciation. provided for by Article 7 of the directive This, too, would be totally contrary to the where reference is made to the laws of the protective aim of the directive, which is to Member States. In this context, there may prevent the consumer from taking on finan- also be provisions relating to the payment of cial obligations without properly considering damages in respect of loss suffered by the their implications. plaintiff. But it must be borne in mind here that the plaintiff alone initiated the contract negotiations and that the plaintiff should there- fore bear the risk of non-conclusion of the contract. Under no circumstances can an agreement to pay damages in the form of a lump sum quantified at 25% of the original price be considered compatible with the direc- 60. On the other hand, payments already tive where the consumer has duly renounced made must be reimbursed and goods already the contract.

C — Conclusion

61. O n the basis of the preceding considerations, I propose the following answer be given to the questions submitted for a preliminary ruling:

— The contract concluded between Travel Vac and Mr M. J. Antelm Sanchis con- cerning rights to use immovable property on a time-share basis is not excluded from the scope of application of Directive 85/577/EEC under Article 3(2)(a) of that directive as it also covers, in addition to the time-share rights, services and other purely contractual obligations which are, at least in terms of their value, greater than the rights relating to immovable property.

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