Our agency had a large
incentive group under contract to take a cruise this fall.
Recently, the cruise line decided to reposition the ship to
originate at another U.S. port city, so it canceled our
sailing.
The corporate client then canceled the entire trip,
depriving us of a huge profit. Do we have any recourse against the
cruise line for breach of contract?
A: Most cruise group contracts that I have seen
do not expressly state that the cruise line can cancel the cruise
or terminate the contract at will. Therefore, one would think that
the cruise line might be liable to you for breach of contract.
However, these contracts typically state that they "incorporate
by reference" the brochure's terms and conditions and the cruise
passenger's ticket terms and conditions. The quoted legal term
means that all those terms and conditions are part of the cruise
group contract.
A typical cruise brochure allows the cruise line to cancel the
cruise at will.
For example, Norwegian Cruise Line's says, "NCL has the right to
cancel, advance, postpone or substitute any scheduled sailing or
itinerary without prior notice."
Because this is part of your agency's contract, you have no
legal recourse.
As I noted in last week's column (Trade Secrets: "Group mistakes"), you shouldn't
have signed the cruise line's contract in your agency's name in the
first place. If the cruise had operated but the group had canceled,
the cruise line would have held you responsible for the unsold
cabins.
Therefore, this contract should have been signed by your agency
only "as agent for" the corporation, unless you were willing to
assume the inventory risk of unsold cabins.
In any event, because it was the cruise line that canceled, the
outcome would have been the same no matter which party signed the
contract.
If your corporate client is chartering an entire ship, the
cruise line contract does not typically allow the cruise line to
cancel for any reason, but only for what is called "force majeure,"
which is a legal term that means problems truly beyond the cruise
line's control, such as natural disasters and wars.
Threats of terrorism probably allow the cruise line to cancel
under force majeure clauses, but they do not allow the corporation
to cancel.
Mark Pestronk is a Fairfax, Va.-based attorney specializing
in travel law. He answers your questions in the TravelWeekly.com
Legal Ease forum. To contact Mark directly, e-mail him at
[email protected].