Q: In previous columns, you have advised that agencies and tour operators need to be sure the client has had a chance to read a disclaimer before the client becomes bound. Otherwise, a court might not enforce it. See, for example, your column on Jan. 23, 2017 ("If suppliers can set a jurisdiction for lawsuits, so can clients"). However, I notice that the cruise lines don't send out their passenger contracts until check-in, by which time there is no refund, so it is too late to back out. That puts the cart before the horse. Why do courts uphold the cruise lines' contracts that are sent after it is too late for passengers to read them before becoming bound? Do the cruise lines enjoy some special exception from the general law of contracts?A:
Cruise lines have no special dispensation. The line and the passenger are subject to the legal principles of contract formation to the same extent as the parties to any ordinary consumer contract.
Only airlines are free from these general principles: Airline contracts of carriage, tariffs, DOT regulations, federal statutes and treaties all apply regardless of whether the passenger has a chance to read them or agree to them.
When you buy a car, you do not have to pay in full before you find out what color the car is. If the dealer required you to do so anyway, and if you were unhappy with the color, you could obviously get your money back. It's the same with cruises.
Cruise lines take a big risk that courts will not uphold contracts sent after it is too late for passengers to cancel without penalty. My best guess is that they have decided to take that risk because it would deter sales if they required everyone to sign a 20-page contract or click "I agree" at the time deposits are taken.
Courts have rarely questioned the cruise lines' procedure. For example, in the 1991 case of Carnival Cruise Lines Inc. v. Shute, the U.S. Supreme Court held that the cruise contract is valid even in instances where it was sent when it was too late for the passengers to cancel.
I know of only one case that squarely upholds the principle that a passenger was not bound when the cruise line sent a contract after the passengers paid in full. In 2005, the Massachusetts Court of Appeals issued an excellent decision in the case of Casavant v. Norwegian Cruise Line Ltd., holding that the plaintiffs could get a full refund even after the no-refund deadline had passed because there was no evidence that the passengers ever agreed to the terms of the contract.
Thanks to a recent article by former judge Thomas Dickerson, who is the author of the treatise called Travel Law, I found another recent case that touches on this subject. In Young v. Holland America Line, a federal judge in California denied the cruise line's motion to transfer the case from San Francisco to Seattle, even though the cruise contract stated that all lawsuits must be brought only in the "Western District of Washington."
The California court stated that, "As an initial matter, the Court is skeptical that a term disclosed only after a purchase is made and at a time when cancellation would cost up to 75% of the ticket price can satisfy the reasonable communicativeness test."
The Casavant and Young cases are very instructive for agencies and operators. Before you can bind the passenger, you need to make him aware of your disclaimer and give him a chance to read it, or else take the risk that a court will refuse to enforce it.