Antonio Flores’ Blog

Companies that regularly advertise are under the impression that, if you insert a disclaimer at the bottom of the ad, you are fully covered. This recurring mistake and a few others can have very serious implications, more so considering that an ad forms part of the contract; let us see some of them.

• Clause “advertiser is not responsible for pricing errors or misprints”: This is a clause prima facie deemed abusive and therefore void. The most cited example is the woman who received a printed offer for a luxury car that, although retailed for €45k, had a price tag of €9k. The ruling held that the advertiser had not rectified in any form and granted the claimant the right to the car for the advertised price.
• Clause “valid whilst supplies last”: this clause is only accepted in season sales or, generally, provided the consumer is able to establish the size and duration of those supplies. The aim of ruling on its illegality is to avoid a supplier’s prerogative to cease selling a product, at an attractive price, at their sole discretion.
• Representations made on brochures: Brochures do have a contractual binding force. A Marbella based property developer, Erasur S.L., was forced by the Supreme Court (12/7/2011) to return 205k to buyers who, having relied on advertised representations of sea, golf and mountain views, bought an apartment that ended up having only mountain views. The Court found that the brochure was not a mere “invitation to negotiate” but a contractual offer for an off-plan apartment.
• Responsibility of editors for publishing misleading ads: In a recent ruling, multinational Hachette Filipacchi was found co-responsible of misleading advertising for hosting an ad for a miraculous slimming product later found to be deceitful (aren’t they all?). Although they were acquitted in the first instance, the Courts applied article 34 of the Unfair Competition and Advertising Act 29/2009 ordering them to cease and to refrain from hosting identical advertising.
• Clause stating a “limitation of liability for losses sustained as a result of relying total or partially on this product”; this clause, shocking as it may sound, was inserted in a brochure issued by a Danish bank that gave Inheritance Tax advice, and wish to now get away with it once the Spanish “Hacienda” has concluded it is fraud. The fate of the clause can be explained by reference to the law on the matter:

Consumer Protection Act, Article 130: Inefficacy of limitation or exoneration of liability clauses: clauses limiting or exonerating from responsibility in respect of instances of civil responsibility under this Act are not applicable and thus, inefficacious.

Antonio Flores Companies, Corporate Law Advertising law Spain, COnsumer Protection Laws Spain, litigation rental contracts, Marketing in Spain, Misleading advertising

A couple of weeks ago, I received a telephone enquiry relating to an imminent bank repossession where the soon-to-be ex property owner, seemingly knowing the ins and outs of rental law, requested a quote to draw up a rental agreement. Out of curiosity I asked him if he was going to submit it to the Courts to stop the eviction, and unsurprisingly, he confirmed my question.

His plan was pretty simple: he as the landlord would sign a backdated tenancy agreement with a friend, for a smallish rent (around €200, inclusive of utilities!), with a view to not be considered an “unlawful occupant” and therefore, avoid eviction on grounds that Spanish laws do actually dispense protection to tenants.

What this enquirer forgot is that common sense applies in Spain too and therefore, in the absence of proof of a history of payments to him by his friend, the Courts would deem the contract bogus and deny its existence and therefore, validity. Moreover, I had to quickly advise him that in fact, the Spanish Criminal Code in its article 257 states that “any person who in detriment of his creditors, carries out any act of valuable disposition or creates obligations that delay, hinder or impede the efficacy of an embargo, executive procedure or reposession, whether judicial, extrajudicial or administrative, initiated or of foreseable initiation, will serve a prison term of between 1 and 4 years.

The Courts uphold the principle of common sense when judging the validity of rental agreements submitted by tenants; let us have a quick look at these 2 examples:

Appeal Court in Toledo: in this case, the rental agreement was deemed a simulation and thus did not express the true intent between the parties because, according to the presiding Judges, it was signed between brothers, the monthly rental was €400 on a 2,000 m2 warehouse, there was no visible activity in it (a big lock on the door is mentioned on a photographic report) and there were only private receipts to prove the rental payments. An accumulation of evidence that, in the eyes of the Court, was consistent with that of a simulated contract and thus, the repossessing bank was granted possession.

Appeal Court in Madrid: Judges in the capital city found the rental contract to be fully valid, as there is a presumption of validity of juridical contracts that needs to be destroyed by the bank, and this has not been achieved as the latter entity since only invoked that the contracts were subsequent to the mortgage loan. And the Spanish Supreme Court is clear on this point: “…not even a bank foreclosure extinguishes tenancy agreements agreed to after signing the mortgage loan, if there is no sufficient proof that there was collusion or fraud.”

Antonio Flores Litigation, Mortgages, Property Eviction Spanish Property, eviction tenants foreclosure, foreclosure in spain, litigation rental contracts, Spanish banks, spanish rental contract