Look up, it’s Aer Lingus
Aer Lingus used to know how to do public relations – in my youth a long time ago in a galaxy far far away, it had three very powerful advertising campaigns which had a profound effect on me. One used the Gallagher & Lyle song “Breakaway” (YouTube) featuring the lyric “breakaway, fly across your ocean / breakaway, time has come for you”. The second featured the musical tag line “Look up, it’s Aer Lingus, there’s a little piece of Ireland flyin’ by”, with a little girl playing in a field looking up at an Aer Lingus Boeing flying overhead – it gave rise to Aer Lingus’s most enduring slogan, which I have used at the head of this paragraph. And the third was called “You’re Home” (YouTube) and featured Gabriel’s Oboe; it never failed to induce a catch in the voice, a lump in the throat, and a tear in the eye. Judging by a controversy that has flared over the last day or two, however, they seem long since to have lost this knack for connecting with the Irish zeitgeist. Instead, they have flown into a tempest of controversy which they moved to abate only after two days of pressure amounting to a public relations debacle for the airline.

The controversy began when the Aer Lingus website offered transatlantic business-class flights for e5 plus taxes. This was a mistake, and when the airline discovered it, not only did they change the website so that no further customers would be able to take advantage of the offer, but they also sought to cancel the flights already booked (AFP | BBC | Belfast Telegraph here and here | BreakingNews.ie | Forbes | Ireland.com Breaking news | Irish Independent here and here | Irish Times | RTE here and here | Limerick Leader | The Guardian | PA | The Sydney Morning Herald here and here). This caused a national outcry ( Argus Car Hire | Jazz Biscuit | Jet vine | Lost Weekend | Paddy Anglican | Portfolio.com | The Irish World | Temple Bar | Value in Ireland | View from the Wing ) on a par with the drumbeats that go up calling for the head of the manager of a national sporting team at the end of another unsuccessful tournament. There has been much misleading pontification about the legal rights and wrongs of the issue, on the part both of the customers and of Aer Lingus, and I propose to add to that din by looking at the Contract Law issues that arise on these facts.

There are, in fact, at least four sets of legal questions here: (i) is there a contract between each of the customers and Aer Lingus; (ii) if so, is it affected by the mistake; (iii) if not, is there a provision in the terms and conditions on which Aer Lingus can rely; and (iv) if not, what remedies are likely to be available to the customers against Aer Lingus?

Contract
The law of contract takes a simple, relatively mechanical, approach to the question of whether a contract has been formed. If the parties have agreed on the same thing, then they have formed a contract; and they will be held to have agreed on the same thing if one party makes an offer which the other has accepted. The question therefore is whether, from the Aer Lingus advertisment, their website, the order placed by the customer, and the acknowledgements on the site and by email from Aer Lingus, an offer and corresponding acceptance can be spelled out. Consumer representatives (such as the National Consumer Agency; update: now the Competition and Consumer Protection Commission) have been emphatic over the last few days that such an agreement had indeed been reached between each customer and Aer Lingus.

To be enforceable, the agreement must be about an exchange of benefits – here money for a flight – but all that matters is that there is an exchange of benefits, the particular values of the benefits (the amount of money or the value of the flight) are irrelevant. (Moreover, the question of whether “money changed hands”, or more particularly whether Aer Lingus had in fact charged the customers’ credit or debit card accounts, is also irrelevant to the prior question of whether there has been an agreement: that simply turns on the correspondence of offer and acceptance).

If there is an agreement about an exchange of benefits, then there will be a contract. But, despite what many commentators for the last few days have been saying, that is not the end of the matter.

Mistake
If there is a contract, the main point against it being relied upon by Aer Lingus is the fact that they made a mistake in the amount that they charged, and that this mistake allowed them to avoid any obligations they might have undertaken in the contract. The law of contract takes a simple, but very narrow, approach to the question of whether a mistake can affect a contract – because the law is committed to a policy of keeping parties to apparent bargains, very few mistakes prevent contracts from binding. In fact, it is only where the mistake is a fundamental one that this policy can be overcome; and the mistake will only be seen as fundamental where it alters to the very nature and substance of the contract. The question then will be whether a mistake as to price, admittedly serious, is so fundamental that it alters the very nature of the contract.

Moreover, whilst in principle a fundamental mistake made by only one party will render the contract void, it is very difficult in fact to persuade a court that one has indeed been made. It is an easier claim if the mistaken party can establish that the other party knew or reasonably ought to have been aware of the mistake. And it is easier still if the same mistake is shared by both of the parties. This final alternative is unlikely, so the strongest case open to Aer Lingus is to argue that the customers ought to have realised that a e5 fare plus taxes for a transatlantic business class flight must have been a mistake.

Terms
If there is a contract, and it is not affected by the airline’s mistake, the next question is what are its terms? Most vending websites won’t allow a purchaser to continue with the purchase unless the box accepting the terms and conditions of sale has been ticked – and I suspect that we all tick that box without reading the terms and conditions or giving them much thought. Nevertheless, once it is ticked, the customer is bound by them. So the question here is whether the Aer Lingus terms and and conditions of sale contain a clause that allows the airline to cancel the contracts in these kinds of circumstances? Even if they didn’t last week, I suspect that it won’t be long before a clause to this effect appears in their terms and conditions. But even if there is such a clause, it had better not be ambiguous. Where one party has no choice but to accept the terms and conditions as drafted by another party, the courts require that the clauses as drafted are interpreted strictly against the interest of the party who drafted it. This is only fair; if one party gets to think about the clause in advance and give the other party no input into it, the party who drafted it must take the consequences of the drafting. Not only a court not cure the consequences of sloppy drafting, it will give the benefit of any ambiguity to the other party. So any clause to allow Aer Lingus to cancel these contracts would have to be in the clearest and most unambiguous of language. And even if it is, it would also have to pass muster under the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995 (S.I. No. 27 of 1995), which require such terms to be reasonable.

Remedies
If there was no contract because of the mistake, then the money paid would have to be refunded, which Aer Lingus have already seem to have done. On the other hand if there was a contract to fly a customer business class for e5 plus taxes and charges, which was not affected by the airline’s mistake, and no term of which allows them to cancel it, what remedies are then available to the customer if the airline refuses to honour the contract? Well, the primary remedy is damages, though where that is not an adequate remedy, a court could order that the contract be performed according to its terms. For most customers who simply want their 5 flights, this order is the most attractive remedy. But if they seek damages, they will not be all that generous. Whilst the law allows quite generous damages for the consequences of, say, an accident, it allows much more limited damages for a breach of contract. The principle is that plaintiffs are entitled to such damages as would put them in the position in which they would have been had the contract been performed – here, they would be entitled to sufficient damages to purchase a business-class transatlantic ticket. But that’s it. They would not be entitled to further damages unless the party breaching the contract could foresee more specific losses – many people have claimed that they are out of pocket in various ways consequent upon booking the flights, but unless the airline could have foreseen these actual arrangements in the case of each individual customer, the airline would not be liable for such expenses or other similar losses.

Conclusion
The customers do not want to “look up, it’s Aer Lingus”; they want to “breakaway, fly across your ocean / breakaway, time has come for” them to be on the planes, in business class; and when they get back, they want their loved ones to remark happily “You’re Home” after a bargain trip-of-a-lifetime. Moreover, Aer Lingus have been very slow to acknowledge that it was their mistake, rather than one made by their customers, which has created this public relations imbroglio for them. They have grudgingly decided (BreakingNews.ie | Ireland.com Breaking News | Irish Independent | NCA | RTE) to offer economy class flights in substitution for the business class flights; according to their press release:

Aer Lingus Apologises to Customers and Offers to Rebook Flights

Aer Lingus announces that it will offer all of the customers who made bookings during the reservation error of Wednesday 16 April the option to travel in economy class at the price of their original booking. Following a full investigation of the booking error undertaken yesterday evening by the company, it appears that some customers may have genuinely believed that they were making a booking in economy class. Aer Lingus are currently contacting passengers that have been affected in order to rebook their travel arrangements.

Aer Lingus has today met with the National Consumer Agency to appraise them of our approach.

It is regrettable that this technical error occurred and Aer Lingus recognises and accepts that customers were upset and inconvenienced. Aer Lingus apologises unreservedly to all customers.

Aer Lingus,
18 April 2008

This might have been a sufficient response when the error was initially discovered, but I suspect that it will not undo the damage done by two days of controversy (update 21 April 2008: this is borne out by the views expressed in today’s Pricewatch column in the Irish Times (sub req’d) and associated blog posts and comments here and here). Many customers will no doubt be satisfied with this; however, some may still persist in their legal claims against the airline, but they should proceed with caution as the legal issues do not seem to me to be entirely straightforward for either of the parties.