Category: Contract

When an airline website makes a mistaken offer, do terms and conditions apply?

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| Contract, Mistaken offers

Image of Hong Kong by Paul Hilton/Bloomberg via Chicago Tribune/LA TimesWhen a website makes a mistaken offer which customers then accept, contracts may very well result. However, that is only a small part of the story. The mistake may mean that there really is no contract. Or the website’s terms and conditions may protect them (though there are some situations in which such terms might not be enforceable).

This kind of mistake is a pretty regular occurrence, and it happened to United Airlines over the weekend. Via the Gulliver blog on the Economist website, I learn of the following story in the Chicago Tribune:

United Airlines error sells Hong Kong flights for 4 miles

United Airlines customers with reward miles were able to book tickets over the weekend to Hong Kong for only four miles, plus taxes and fees, because of a programing error, according to the airline.

A round-trip flight from Los Angeles to Hong Kong typically starts around $1,800 or 60,000 reward miles under the MileagePlus reward program.

But because of a programing error, some United passengers who booked flights to, from or through Hong Kong were charged only four miles plus taxes and fees, which amount to about $35. …

United Airlines have cancelled the tickets, though it is not clear to me that this is permitted in Rule 5 of United’s Contract of Carriage (and it may run afoul of the US Department of Transportation rules).…

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The Muppets and Contract Law

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| Cinema, television and theatre, Contract

The 'Stardard Rich and Famous Contract' in the Muppet Movie, via the Muppet wikiaI’ve recently had the great good fortune to see The Muppets (2011) (imdb | official site | wikipedia). Like the recent classic movie Shrek Forever After, it is very much a movie about contract law: indeed, both movies turn on cultural assumptions about the binding nature and literal enforcement of written contracts.

Warning: plot spoilers At the end of The Muppet Movie (1979) (imdb | wikipedia), the Muppets are hired by studio executive Lew Lord (played – in a splendid cigar-chomping movie-stealing cameo – by Orson Welles) under “the standard rich-and-famous contract” (pictured above left). It has the generally assumed form of contracts: it is long; indeed, it is vveerry long – it contains a multitude of clauses, and those terms are the heart of the new movie: The Muppets. Nancy Kim on Contracts Prof Blog mentions a few of the issues:

… the star of the new Muppets movie is a long, scrolled, fine print contract signed by none other than Kermit the Frog. The entire plot hinges on … a condition in the contract … A real live condition – but is it a condition precedent or condition subsequent? In addition, there are issues of nondisclosure (there’s oil under the theatre, but the evil Tex Richman isn’t telling).

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Reform of Contract Law

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| Contract

Not only is the Scottish Law Commission (SLC) undertaking a comprehensive review of Scots Contract Law in light of the Draft Common Frame of Reference (DCFR) of Principles, Definitions and Model Rules of European Private Law, but the Australian Attorney-General, Nicola Roxon, has just released a discussion paper to explore the scope for reforming Australian Contract Law.

Scottish Law Commission logo, via their siteThe most recent discussion paper produced by the SLC discusses contract formation for the electronic age (DP 154, March 2012, pdf). It follows an earlier discussion paper with interpretation of contract (DP 147, Feb 2011, pdf), and a joint project (pdf) with the Law Commission of England and Wales on the proposed Common European Sales Law. Moreover, the SLC intend to publish further discussion papers, including one in the near future on remedies for breach of contract. Chapter 9 of the contract formation discussion paper contains 51 questions, and the Appendix contains some draft statutory provisions, drawn from various European texts.

Australian AG logo, via their siteThe Australian review is equally as ambitious. The discussion paper (doc | pdf) aims to improve the efficiency and effectiveness of commercial and consumer transactions; and it therefore considers whether Australian contact law could be reformed to:

  • enhance accessibility, certainty and simplicity
  • set standards of conduct
  • better support innovation and participation in the digital economy
  • better meet the evolving needs of businesses particularly small and medium businesses
  • make the law more elastic to promote long-term relationships, and
  • harmonise and internationalise contract law.
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Contracts at Christmas

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| Contract
Consumer Protection Cartoon

This is one of Stu’s Views wonderful law & lawyer cartoons.

Bonus 1: Have a look at the Christmas contract letters (the link is to the first of a funny series), between Bizzles LLP, representing Mr Timothy Taylor (referred to in the agreement as “Little Timmy”), of the one part, and Donner, Blitzen and Rudolf LLP, representing the Santa Claus Group, of the other part, concerning an agreement between for the delivery of Christmas presents.

Bonus 2: The Law & Humanities blog has collected a few other seasonal claims including Santa. Enjoy! And merry Christmas.…

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Freedom of Contract – In Ireland

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| Contract, General, Irish Law

The MultiText Project in History is an innovative educational project, undertaken by the History Department, University College Cork, to provide resources for students of Modern Irish History at all levels. The following arresting image is available on their website:

Freedom of Contract - In Ireland


MultiText’s source for the image is the Weekly Freeman for 25 February 1882, and they comment that “the unequal nature of the landlord/tenant relationship was a major cause of the land war” (a period of civil unrest in rural Ireland in the latter half of the nineteenth century, ultimately defused by a series of Land Acts between 1870 and 1903).

The image shows an unhappy tenant seated at a table, unwillingly signing a lease. Under the table can be seen a notice to increase rent and a notice to quit. At the top are two inset images, one of John Bull, the other of a destitute family heading for the workhouse. The tenant is surrounded by three grim-looking men. One has a bill for outstanding rent in his pocket, and he is brandishing an eviction decree. Another brandishes a cudgel of some sort. The third is stabbing his finger at the lease.

The caption along the bottom reads: Freedom of Contract – In Ireland.…

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SCOTUS on Privity via ContractsProf Blog:

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| Contract, General

Supreme Court Decides Case Involving Third-Party Beneficiaries Issue

Last week, the U.S. Supreme Court issued its opinion in Astra USA v. Santa Clara County in which it unanimously overturned a decision of the Ninth Circuit Court of Appeals.  The case was brought by Santa Clara County, which operates several 340B entities, that is, public hospitals or community health organizations involved in delivering medical services to the poor.  The county claimed a right to sue for overcharges on prescription medications provided through a PPA, or Pharmaceutical Pricing Agreement entered into between drug manufacturers and a division of the Department of Health and Human Services.  Although no statute created a private right of action to sue on such PPAs, the county claimed that it could sue as a third-party beneficiary of the PPAs to which the drug manufacturers had agreed.

Justice Ginsburg, writing for the Court, determined that permitting such third-party beneficiary suits would be incompatible with the statutory design.  The 340B program and its attendant PPAs are to be administered by the Secretary of HHS and her agents.  HHS oversight would be impossible if third-parties were permitted to set themselves up as independent enforcement agencies.  This is so because the drug companies are required under the statute to provide price information to the government so that it can set price ceilings.

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Suppose the law: M. NourbeSe Philip’s The Zong!

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| Contract, The Zong

Cover of M. NourbeSe Philip's 'Zong!' via the Dartmouth UP websiteThe Zong (Gregson v Gilbert (1783) 3 Doug 232, 99 ER 629, [1783] EngR 85 (22 May 1783) (pdf)) is an infamous case. It concerned a claim against an insurer for the value of slaves thrown overboard from The Zong to allow the crew to survive a chronic lack of drinking water (it is voyage 84106 on the Trans-Atlantic Slave Trade Database). The claim succeeded at first instance, but failed on appeal before Lord Mansfield and Willis and Buller JJ. I have already blogged about Nate Oman’s review of Simon Schama’s Rough Crossings: Britain, Slaves, and the American Revolution (Harper Collins, 2007) which discussed the case, and about an episode of a television drama inspired by the case. Now Kate Sutherland brings news that poet (and recovering lawyer) M. NourbeSe Philip has published an extended poetry cycle about the case: Zong! As told to the author by Setaey Adamu Boateng (Wesleyan University Press | The Mercury Press | Google Books (2008)). The abstract describes the book as “a haunting lifeline between archive and memory, law and poetry” and continues:

In November, 1781, the captain of the slave ship Zong ordered that some 150 Africans be murdered by drowning so that the ship’s owners could collect insurance monies.

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Hadley v Baxendale in the Irish High Court

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| Contract, General

Hanrahan v Minister For Agriclture, Fisheries And Food [2010] IEHC 442 (26 November 2010)

McMahon J:

11. It is well established that a plaintiff may recover such damages for a breach of contract ‘as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things’ or ‘such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it’. This test was set out in Hadley v Baxendale (1854) 9 Ex 341 at 354-355, and has been approved in numerous Irish decisions such as Lennon v. Talbot Ireland Ltd (Unreported, High Court, 20th December 1985), and Lee v. Rowan (Unreported, High Court, 17th November, 1981,).

12. The plaintiff is entitled to such damages as would put him as nearly as possible into the position in which he would have been had the animals been returned as agreed. In the absence of the cattle themselves, a sum of money to represent their value should be awarded. Additionally, the plaintiff claims he is entitled to profits lost and expenditure incurred because of the breach of the agreement. In the present case, these primarily relate to his loss of milk from the milking cows not returned.

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