Sherman & Anor v Reader Offers Ltd

Factual and Procedural Background

The Plaintiff and their spouse booked a cruise to the Northwest Passage in Arctic Canada with Company A, a travel company operating primarily through advertisements. Due to adverse ice conditions, the cruise ship was able to visit very little of the Northwest Passage, and the sites visited did not include historically significant areas associated with the great explorers of the region. Instead, most of the cruise was spent exploring the west coast of Greenland.

The Plaintiffs brought a claim in the County Court seeking a refund and compensation on the basis that they should have been notified of the changed arrangements and offered a right to cancel. After a seven-day trial, the claim was dismissed by the Recorder. On appeal to the High Court, the Judge held that Company A was in breach of contract in two respects and remitted the case to the County Court to consider remedies. Company A appealed to the Court of Appeal seeking to restore the Recorder's decision. The Court of Appeal dismissed the appeal and gave directions for remission to the County Court.

Legal Issues Presented

1. When was the binding contract between the parties concluded and what were its terms?
2. Did the contract include a detailed itinerary for the cruise, and if so, was the itinerary an essential term?
3. Whether the changes made to the itinerary before departure constituted a major change or significant alteration under Company A’s terms and the 1992 Regulations.
4. Whether Company A complied with its obligations to notify the Plaintiffs of significant changes and inform them of their rights, including the right to cancel.
5. Whether Company A was liable for failure to provide a significant proportion of the contracted services after departure and whether any exemptions applied under the 1992 Regulations or the contract’s Force Majeure provisions.
6. The appropriate remedy and assessment of compensation following any breach found.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analysed the formation of the contract under domestic law principles, emphasizing that the 1992 Regulations inform but do not dictate the moment of contract formation. The Court rejected Company A’s primary case that the contract was concluded during the telephone call on 9th January 2018, finding that the parties did not intend to be legally bound at that stage because the contractual terms had not yet been provided in writing as required by Regulation 9 of the 1992 Regulations.

The Court held that the contract was concluded when Company A sent the booking conditions and initial booking summary on 10th January 2018, but found that this summary was too vague to constitute a full itinerary and did not satisfy the requirements of Regulation 9. The contract only became binding when the confirmation documents, including the detailed itinerary, were sent on 22nd January 2018, which incorporated the detailed itinerary as a contractual term.

The Court further analysed the contractual terms distinguishing between minor and major changes under Company A’s booking conditions and the 1992 Regulations. It found that the change of embarkation point and the reduction of the Northwest Passage portion of the cruise before departure constituted a major change or significant alteration, triggering Company A’s obligation to notify the Plaintiffs as soon as reasonably possible and inform them of their rights, including the right to cancel with a full refund.

Company A failed to provide timely notification and information, breaching Regulation 12 and the equivalent contractual provisions. After departure, Company A failed to provide a significant proportion of the services contracted for due to the curtailed itinerary, constituting a breach under Regulation 14.

Company A sought to rely on a Force Majeure defence under Regulation 15 and its terms and conditions. The Court accepted that the ice conditions were beyond Company A’s control but held they were foreseeable given the variability and unpredictability of Arctic ice conditions. Therefore, the Force Majeure defence did not apply to exempt Company A from liability for failure to notify or for the breach of contract after departure.

The Court emphasised the consumer protection purpose of the 1992 Regulations, requiring organisers to bear risks of such foreseeable contingencies and to provide consumers with clear information and options.

Finally, the Court clarified that the case was remitted to the County Court solely for assessment of damages, not for re-litigation of factual findings or dismissed claims such as deceit or negligence.

Holding and Implications

The Court of Appeal DISMISSED THE APPEAL, upholding the High Court’s decision that Company A was in breach of contract and the 1992 Regulations.

The direct effect of this decision is that Company A must compensate the Plaintiffs for the curtailed cruise and the failure to provide timely information and cancellation rights. The case was remitted to the County Court to determine the quantum of damages based on whether the Plaintiffs would have cancelled or proceeded had they been properly informed.

No new precedent was established beyond the application of existing principles regarding contract formation, consumer protection under the 1992 Regulations, and the interpretation of Force Majeure in the context of package holidays.